Notice after each account item that a note and a number is stated. These numbers refer to the Notes to the Financial Statements and allows readers (investors) the opportunity to see how J&B arrived at each account balance or value. This will become more apparent later on as we discuss Part C of the Financial Plan entitled "Notes to the Forecasted Financial Statements".
Also, notice J&B's three year Forecasted Income Statement is one page in length. The revenue and expense "items" are listed on the left hand side, while each year's forecasted revenues and expenses ("values") are shown in a column to the right. Your forecasted income statement for a three year period should appear in a similar fashion. Moreover, it is more professional and investors can compare your expected revenue and expense projections from year to year.
This concludes our discussion on how your forecasted income statements should appear in your Financial Plan. Remember it is imperative to understand the theory behind the income statement before attempting to forecast your own. To learn more about this statement, please refer to the section entitled " The Income Statement ". When you understand the theory behind each financial statement and analysis, you will be equipped with the tools necessary tools needed in Forecasting Your Own Forecasted Financial Statements .
2. THE FORECASTED BALANCE SHEETS
The next statement to appear in the financial plan is your Forecasted Balance Sheets. Three, annual (year end) Forecasted Balance Sheets should follow your three year projected income statements. These forecasted balance sheets show investors the items your business anticipates to own at the beginning and end of each forecasted year. In addition, these statements will show investors how much your business anticipates to owe at the beginning and end of each forecasted period. By developing a forecasted annual balance sheet for three years into the future, you and investors will be able to determine if your proposed business provides an opportunity (IE profitable).
In addition to the three year forecasted balance sheets, investors will want to see an opening balance sheet. An opening balance sheet generally shows the businesses' assets, liabilities, and owner's investments into the business.
The three year forecasted balance sheets should be placed on one page. Moreover, the one page will consist of four columns - one column for your opening balance sheet, one column for the first year forecasted balance sheet, one column for the second year forecasted balance sheet, and one column for your third year forecasted balance sheet. Below provides an example of J&B Incorporated's forecasted Balance Sheet.
Ending Cash (note 21) | $ 63,314 | $ 57,608 | $ 61,968 | $ 94,091 |
Office Supplies (note 6) | $ 0 | $ 500 | $ 735 | $ 476 |
Finished Diskette Inventory (note 2) | $ 0 | $ 6,683 | $ 2,803 | $ 1,790 |
Finished CD Inventory (note 2) | $ 0 | $ 3,103 | $ 2,072 | $ 2,053 |
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Net Computer Equipment (note 16) | $ 7,602 | $ 9,426 | $ 10,034 | $ 11,642 |
Net Office Furniture (note 17) | $ 1,412 | $ 2,425 | $ 3,018 | $ 3,712 |
Net Intangible - Initial R&D (note 18) | $ 47,772 | $ 31,848 | $ 15,924 | $ 0 |
Net Intangible - Future R&D (note 19) | $ 0 | $ 74,161 | $140,923 | $179,789 |
Accounts Payable (note 22) | $ 0 | $ 4,975 | $ 5,274 | $ 6,394 |
Wages & Employee Benefits (note 23) | $ 0 | $ 1,686 | $ 2,049 | $ 2,336 |
Operating Loan Payable (note 13) | $20,000 | $ 0 | $ 0 | $ 0 |
Taxes Payable (note 20) | $ 0 | $ 29,698 | $ 31,728 | $ 34,919 |
100 Class A Common Shares(note 24) | $ 100 | $ 100 | $ 100 | $ 100 |
50 Class B Common Shares (note 24) | $100,000 | $100,000 | $100,000 | $100,000 |
Retained Earnings (note 25) | $ 0 | $ 49,294 | $ 98,326 | $149,804 |
* April 30, 1998 represents the forecasted account balances at the end of the product's development phase. | ||||
** April 30, 1999 represents the forecasted account balances at the end of the company's first year of operation. |
Notice J&B's three year Forecasted Balance is one page in length. The Asset, Liability, and Equity "items" are listed on the left hand side, while each year's forecasted account balances (values) are shown in a column to the right. Your forecasted balance sheet for a year three period should appear in a similar fashion. It is more tidy and investors can compare your expected financial position from year to year.
Also, notice after each account item that a note and a number is stated. These numbers refer to the Notes to the Financial Statements and allows readers (investors) the opportunity to see how J&B arrived at each account balance or value. This will become more apparent later on as we discuss Part C of the Financial Plan entitled "Notes to the Forecasted Financial Statements".
This concludes our discussion on how your projected balance sheet should appear in your Financial Plan. Remember it is imperative to understand the theory behind the Balance Sheet before attempting to forecast your own. To learn more about this statement, please refer to the section entitled " The Balance Sheet ". When you understand the theory behind each financial statement and analysis, you will be equipped with the tools necessary tools needed in Forecasting Your Own Forecasted Financial Statements .
3. FORECASTED CASH FLOW STATEMENTS
The next statement to appear in the financial plan is your Forecasted Cash-flow Statements. The Cash Flow Statement is a tool used to forecast the movement of cash into and out-off the business. The movement of cash into a company may result from sales to customers, cash from investors, cash from bank loans, cash from the owners, cash from interest earned, cash from commission sales, or from any other source that provides cash to the business. The movement of cash out-off the company might include items such as advertising, wages and salaries, inventory purchases, payment on taxes, payment on business loans, utilities, owner withdrawals, rent, dividends, and so on.
Without the necessary cash, a business will not survive. Therefore, a forecasted cash flow statement is constructed to determine if an entrepreneur's business will have enough cash to carry out the day to day (month to month) operations.
A cash flow statement can be organized on a daily, weekly, monthly or quarterly bases. Most bankers and other investors, however, prefer see a monthly cash flow statement for a three year period. In other words, you will be required to develop three forecasted cashflow statements, each consisting of a twelve month period.
This may seem overwhelming at first, but with the aid of a spreadsheet program such as Lotus 123 or Excel, the task becomes rather simple. If you do not have a spreadsheet program, you are advised to purchase one and learn how it operates - It is an invaluable business tool that will save you lots of time and money. Below provides an example of J&B's forecasted cashflow statement for a three year period. (please note: normally each annual cashflow statement is constructed in a spreadsheet program and consist of a twelve month forecasted period. Due to the margins of this program, we are unable to place twelve columns on one page. As a result, we have used two pages for each year to illustrate J&B's annual forecasted cash flow statement).
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Percentage of Sales (per month) | 3% | 3% | 8% | 8% | 9% | 9% | 10% |
Total Unit Sales/ Month) | 236 | 236 | 631 | 631 | 709 | 709 | 788 |
Diskette Sales (note 26) | 142 | 142 | 378 | 378 | 426 | 426 | 473 |
CD Sales (note 26) | 83 | 83 | 221 | 221 | 248 | 248 | 276 |
Internet Sales (note 26) | 12 | 12 | 32 | 32 | 35 | 35 | 39 |
Weighed Average Selling Price (1) | $73.89 | $73.89 | $73.89 | $73.89 | $73.89 | $73.89 | $73.89 |
Cash From Product Sales (100%) | $17,472 | $17,472 | $46,592 | $46,592 | $52,416 | $52,416 | $58,240 |
Less: Bad Debt Expense (1%) | $ 175 | $ 175 | $ 466 | $ 466 | $ 524 | $ 524 | $ 582 |
Purchase of Diskettes (note 27 a) | $8,670 | $ 0 | $ 0 | $ 8,670 | $ 0 | $ 8,670 | $ 0 |
Purchase of CD (note 27 b) | $2,500 | $ 0 | $ 0 | $ 0 | $ 2,500 | $ 0 | $ 0 |
Credit Card Charges (note 27 c) | $ 877 | $ 877 | $ 2,339 | $ 2,339 | $ 2,632 | $ 2,632 | $ 2,924 |
Packaging Charges (note 27 d) | $ 130 | $ 130 | $ 347 | $ 347 | $ 391 | $ 391 | $ 434 |
Actual Shipping Charges (note 27 e) | $ 636 | $ 636 | $ 1,696 | $ 1,696 | $ 1,908 | $ 1,908 | $ 2,120 |
Toll Free Charges (note 27 f) | $ 0 | $ 471 | $ 471 | $ 1,255 | $ 1,255 | $ 1,412 | $ 1,412 |
Commission on Sales (note 27 g) | $ 0 | $ 236 | $ 236 | $ 631 | $ 631 | $ 709 | $ 709 |
Product Miscellaneous (note 27 h) | $ 118 | $ 118 | $ 315 | $ 315 | $ 355 | $ 355 | $ 394 |
Advertising | $5,000 | $5,000 | $12,000 | $12,000 | $12,000 | $12,000 | $12,000 |
Wages & Employee Benefits | $6,217 | $6,900 | $10,464 | $10,857 | $10,857 | $10,857 | $10,857 |
Research & Development | $7,630 | $8,240 | $ 8,240 | $ 8,240 | $ 8,240 | $ 8,240 | $ 8,240 |
Casual Labor | $ 0 | $ 0 | $ 0 | $ 800 | $ 0 | $ 0 | $ 0 |
Office Supplies | $ 0 | $ 500 | $ 0 | $ 0 | $ 500 | $ 0 | $ 0 |
Rent | $1,000 | $1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 |
Telephone/Fax | $ 0 | $ 300 | $ 300 | $ 300 | $ 300 | $ 300 | $ 300 |
Professional Services | $ 0 | $2,250 | $ 2,250 | $ 250 | $ 250 | $ 250 | $ 250 |
Business Insurance | $1,500 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Toll-free Charges above Variable | $ 0 | $ 471 | $ 471 | $ 1,255 | $ 1,255 | $ 1,412 | $ 1,412 |
Miscellaneous Charges | $ 200 | $ 200 | $ 200 | $ 200 | $ 200 | $ 200 | $ 200 |
Office Furniture | $1,618 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Office Equipment | $4,966 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Payment on Operating Loan | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Interest on Loan | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Internet Storage and Accounts | $ 150 | $ 150 | $ 150 | $ 150 | $ 150 | $ 150 | $ 150 |
Dividends Paid (note 28) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $20,000 |
Net Cash Flow (Deficiency) | $-23,915 | $-10,183 | $5,646 | $-4,179 | $7,470 | $1,407 | $-4,744 |
Beginning Cash Balance (note 21) | $63,314 | $39,398 | $29,216 | $34,862 | $30,683 | $38,153 | $39,560 |
The remaining five (5) months of J&B's first year Forecasted Cashflow Statement is presented below. Recall this is not the correct format - the first year cashflow statement should be developed in a spreadsheet program and should appear on one page.
Percentage of Total Sales (per month) | 10% | 10% | 10% | 10% | 10% | 100% |
Total Unit Sales/ Month) | 788 | 788 | 788 | 788 | 788 | 7,882 |
Diskette Sales (note 26) | 473 | 473 | 473 | 473 | 473 | 4729 |
CD Sales (note 26) | 276 | 276 | 276 | 276 | 276 | 2,759 |
Internet Sales (note 26) | 39 | 39 | 39 | 39 | 39 | 394 |
Weighed Average Selling Price (note 1) | $73.89 | $73.89 | $73.89 | $73.89 | $73.89 | |
Cash From Product Sales (100%) | $58,240 | $58,240 | $58,240 | $58,240 | $58,240 | $582,401 |
Less: Bad Debt Expense (1%) | $ 582 | $ 582 | $ 582 | $ 582 | $ 582 | $ 5,824 |
Purchase of Diskettes (note 27 a) | $ 0 | $13,005 | $ 0 | $ 8,670 | $ 0 | $47,658 |
Purchase of CD (note 27 b) | $ 0 | $ 2,500 | $ 0 | $ 0 | $ 2,500 | $ 10,000 |
Credit Card Charges (note 27 c) | $2,924 | $ 2,924 | $ 2,924 | $ 2,924 | $ 2,924 | $ 29,242 |
Packaging Charges (note 27 d) | $ 434 | $ 434 | $ 434 | $ 434 | $ 434 | $ 4,343 |
Actual Shipping Charges (note 27 e) | $2,120 | $ 2,120 | $ 2,120 | $ 2,120 | $ 2,120 | $ 21,199 |
Toll Free Charges (note 27 f) | $1,569 | $ 1,569 | $ 1,569 | $ 1,569 | $ 1,569 | $ 14,117 |
Commission on Sales (note 27 g) | $ 788 | $ 788 | $ 788 | $ 788 | $ 788 | $ 7,094 |
Product Miscellaneous (note 27 h) | $ 394 | $ 394 | $ 394 | $ 394 | $ 394 | $ 3,941 |
Advertising | $12,000 | $12,000 | $12,000 | $12,000 | $12,000 | $130,000 |
Wages & Employee Benefits | $10,857 | $10,857 | $10,857 | $10,857 | $10,857 | $121,291 |
Research & Development | $8,240 | $8,240 | $ 8,240 | $ 8,240 | $ 8,240 | $ 98,271 |
Casual Labour | $ 800 | $ 0 | $ 0 | $ 0 | $ 800 | $ 2,400 |
Office Supplies | $ 500 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,500 |
Rent | $1,000 | $1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 12,000 |
Telephone/Fax | $ 300 | $ 300 | $ 300 | $ 300 | $ 300 | $ 3,300 |
Professional Services | $ 250 | $ 250 | $ 250 | $ 250 | $ 250 | $ 6,750 |
Business Insurance | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,500 |
Toll-free Charges above Variable | $1,569 | $1,569 | $ 1,569 | $ 1,569 | $ 1,569 | $ 14,117 |
Miscellaneous Charges | $ 200 | $ 200 | $ 200 | $ 200 | $ 200 | $ 2,400 |
Office Furniture | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,618 |
Office Equipment | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 4,966 |
Payment on Operating Loan | $20,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 20,000 |
Interest on Loan | $ 2,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 2,000 |
Internet Storage and Accounts | $ 900 | $ 150 | $ 150 | $ 150 | $ 150 | $ 2,550 |
Dividends Paid (note 28) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 20,000 |
Net Cash Flow (Deficiency) | $(9,187) | $ (642) | $14,863 | $ 6,193 | $11,563 | |
Plus Beginning Cash Balance (note 21) | $34,816 | $25,629 | $24,988 | $39,851 | $46,044 | |
* Numbers are rounded. |
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Percentage of Sales (per month) | 8% | 7% | 7% | 8% | 8% | 10% | 9% |
Total Unit Sales/ Month) | 793 | 693 | 693 | 793 | 793 | 991 | 892 |
Diskette Sales (note 26) | 317 | 277 | 277 | 317 | 317 | 396 | 357 |
CD Sales (note 26) | 396 | 347 | 347 | 396 | 396 | 495 | 446 |
Internet Sales (note 26) | 79 | 69 | 69 | 79 | 79 | 99 | 89 |
Weighed Average Selling Price (1) | $68.01 | $68.01 | $68.01 | $68.01 | $68.01 | $68.01 | $68.01 |
Product Cost Inflation Rate | 5% | 5% | 5% | 5% | 5% | 5% | 5% |
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Cash From Product Sales (100%) | $53,902 | $47,164 | $47,164 | $53,902 | $53,902 | $67,378 | $60,640 |
Less: Bad Debt Expense (1%) | $ 539 | $ 472 | $ 472 | $ 539 | $ 539 | $ 674 | $ 606 |
Purchase of Diskettes (note 27 a) | $ 0 | $ 9,100 | $ 0 | $ 0 | $ 9,100 | $ 0 | $ 0 |
Purchase of CD (note 27 b) | $ 0 | $ 0 | $ 2,630 | $ 0 | $ 0 | $ 3,945 | $ 0 |
Credit Card Charges (note 27 c) | $ 2,726 | $ 2,386 | $ 2,386 | $ 2,726 | $ 2,726 | $ 3,408 | $ 3,067 |
Packaging Charges (note 27 d) | $ 435 | $ 381 | $ 381 | $ 435 | $ 435 | $ 544 | $ 490 |
Actual Shipping Charges (note 27 e) | $ 1,752 | $ 1,533 | $ 1,533 | $ 1,752 | $ 1,752 | $ 2,190 | $ 1,971 |
Toll Free Charges (note 27 f) | $ 1,569 | $ 1,656 | $ 1,449 | $ 1,449 | $ 1,656 | $ 1,656 | $ 2,071 |
Commission on Sales (note 27 g) | $ 788 | $ 832 | $ 728 | $ 728 | $ 832 | $ 832 | $ 1,040 |
Product Miscellaneous (note 27 h) | $ 420 | $ 368 | $ 368 | $ 420 | $ 420 | $ 525 | $ 473 |
Advertising | $12,500 | $12,500 | $12,500 | $12,500 | $12,500 | $12,500 | $12,500 |
Wages & Employee Benefits | $11,298 | $11,346 | $11,346 | $11,346 | $11,346 | $11,346 | $11,346 |
Research & Development | $ 9,850 | $10,165 | $10,165 | $10,165 | $10,165 | $10,165 | $10,165 |
Casual Labour | $ 750 | $ 0 | $ 0 | $ 750 | $ 0 | $ 0 | $ 0 |
Office Supplies | $ 500 | $ 0 | $ 0 | $ 488 | $ 0 | $ 488 | $ 0 |
Rent | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 |
Telephone/Fax | $ 300 | $ 320 | $ 320 | $ 320 | $ 320 | $ 320 | $ 320 |
Professional Services | $ 250 | $ 292 | $ 292 | $ 292 | $ 292 | $ 292 | $ 292 |
Business Insurance | $ 1,650 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Toll-free Charges above Variable | $ 1,569 | $ 1,656 | $ 1,449 | $ 1,449 | $ 1,656 | $ 1,656 | $ 2,071 |
Miscellaneous Charges | $ 217 | $ 217 | $ 217 | $ 217 | $ 217 | $ 217 | $ 217 |
Taxes Payable | $29,698 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Office Furniture | $ 1,500 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Office Equipment | $ 5,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Internet Storage & Accounts | $ 160 | $ 160 | $ 160 | $ 160 | $ 160 | $ 160 | $ 160 |
Dividends Paid (note 28) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $25,000 |
Net Cash Flow (Deficiency) | $-30,618 | $ -7,269 | $ - 281 | $ 7,115 | $ -1,265 | $15,410 | $-12,198 |
Plus Beginning Cash Balance | $57,608 | $26,989 | $19,721 | $19,440 | $26,555 | $25,290 | $40,700 |
The remaining five (5) months of J&B's second year Forecasted Cashflow Statement is presented below. Recall this is not the correct format - the second year cashflow statement should be developed in a spreadsheet program and should appear on one page.
Percentage of Total Sales (per month) | 8% | 7% | 10% | 9% | 9% | 100% |
Total Unit Sales/ Month) | 793 | 693 | 991 | 892 | 892 | 9,907 |
Diskette Sales (note 26) | 317 | 277 | 396 | 357 | 357 | 3,963 |
CD Sales (note 26) | 396 | 347 | 495 | 446 | 446 | 4,954 |
Internet Sales (note 26) | 79 | 69 | 99 | 89 | 89 | 991 |
Weighed Average Selling Price (note 1) | 68.01 | 68.01 | 68.01 | $68.01 | $68.01 | |
Product Cost Inflation Rate | 5% | 5% | 5% | 5% | 5% | |
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Cash From Product Sales (100%) | $53,902 | $47,164 | $67,378 | $60,640 | $60,640 | $673,775 |
Less: Bad Debt Expense (1%) | $ 539 | $ 472 | $ 674 | $ 606 | $ 606 | $ 6,738 |
Purchase of Diskettes (note 27 a) | $ 9,100 | $ 0 | $ 0 | $ 4,550 | $ 0 | $ 31,850 |
Purchase of CD (note 27 b) | $ 0 | $ 2,630 | $ 0 | $ 0 | $ 2,630 | $ 11,835 |
Credit Card Charges (note 27 c) | $ 2,726 | $ 2,386 | $ 3,408 | $ 3,067 | $ 3,067 | $ 34,080 |
Packaging Charges (note 27 d) | $ 435 | $ 381 | $ 544 | $ 490 | $ 490 | $ 5,439 |
Actual Shipping Charges (note 27 e) | $ 1,752 | $ 1,533 | $ 2,190 | $ 1,971 | $ 1,971 | $ 21,904 |
Toll Free Charges (note 27 f) | $ 1,864 | $ 1,656 | $ 1,449 | $ 2,071 | $ 1,864 | $ 20,411 |
Commission on Sales (note 27 g) | $ 936 | $ 832 | $ 728 | $ 1,040 | $ 936 | $ 10,254 |
Product Miscellaneous (note 27 h) | $ 420 | $ 368 | $ 525 | $ 473 | $ 473 | $ 5,251 |
Advertising | $12,500 | $12,500 | $12,500 | $12,500 | $12,500 | $150,000 |
Wages & Employee Benefits | $11,346 | $11,346 | $11,346 | $11,346 | $11,346 | $136,104 |
Research & Development | $10,165 | $10,165 | $10,165 | $10,165 | $10,165 | $121,662 |
Casual Labour | $ 750 | $ 0 | $ 0 | $ 0 | $ 750 | $ 3,000 |
Office Supplies | $ 0 | $ 488 | $ 0 | $ 0 | $ 488 | $ 2,450 |
Rent | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 | $ 12,600 |
Telephone/Fax | $ 320 | $ 320 | $ 320 | $ 320 | $ 320 | $ 3,820 |
Professional Services | $ 292 | $ 292 | $ 292 | $ 292 | $ 292 | $ 3,458 |
Business Insurance | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,650 |
Toll-free Charges above variable | $ 1,864 | $ 1,656 | $ 1,449 | $ 2,071 | $ 1,864 | $ 20,411 |
Miscellaneous | $ 217 | $ 217 | $ 217 | $ 217 | $ 217 | $ 2,600 |
Taxes Payable | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 29,698 |
Office Furniture | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,500 |
Computer Equipment | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 5,000 |
Internet Storage & Accounts | $ 940 | $ 160 | $ 160 | $ 160 | $ 160 | $ 2,700 |
Dividends Paid | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 25,000 |
Net Cash Flow (Deficiency) | $-3,313 | $-1,286 | $20,360 | $ 8,252 | $ 9,453 | |
Plus: Beginning Cash Balance | $28,502 | $25,189 | $23,903 | $44,263 | $52,515 | |
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Percentage of Total Sales (per month) | 8% | 7% | 7% | 8% | 8% | 10% | 9% |
Total Unit Sales/ Month) | 928 | 812 | 812 | 928 | 928 | 1,160 | 1,044 |
Diskette Sales (note 26) | 186 | 162 | 162 | 186 | 186 | 232 | 209 |
CD Sales (note 26) | 603 | 528 | 528 | 603 | 603 | 754 | 679 |
Internet Sales (note 26) | 139 | 122 | 122 | 139 | 139 | 174 | 157 |
Weighed Average Selling Price ( 1) | $67.61 | $67.61 | $67.61 | $67.61 | $67.61 | $67.61 | $67.61 |
Product Cost Inflation Rate | 10% | 10% | 10% | 10% | 10% | 10% | 10% |
Cash From Product Sales (100%) | $62,753 | $54,909 | $54,909 | $62,753 | $62,753 | $78,441 | $70,597 |
Less: Bad Debt Expense (1%) | $ 628 | $ 549 | $ 549 | $ 628 | $ 628 | $ 784 | $ 706 |
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Purchase of Diskettes (note 27 a) | $ 0 | $ 9,540 | $ 0 | $ 0 | $ 0 | $ 0 | $ 9,540 |
Purchase of CD (note 27 b) | $ 0 | $ 5,500 | $ 0 | $ 0 | $ 5,500 | $ 0 | $ 0 |
Credit Card Charges (note 27 c) | $ 3,193 | $ 2,794 | $ 2,794 | $ 3,193 | $ 3,193 | $ 3,991 | $ 3,592 |
Packaging Charges (note 27 d) | $ 505 | $ 442 | $ 442 | $ 505 | $ 505 | $ 631 | $ 568 |
Actual Shipping Charges (note 27 e) | $ 1,554 | $ 1,360 | $ 1,360 | $ 1,554 | $ 1,554 | $ 1,943 | $ 1,748 |
Toll Free Charges (note 27 f) | $ 1,863 | $ 2,033 | $ 1,779 | $ 1,779 | $ 2,033 | $ 2,033 | $ 2,541 |
Commission on Sales (note 27 g) | $ 936 | $ 1,021 | $ 893 | $ 893 | $ 1,021 | $ 1,021 | $ 1,276 |
Product Miscellaneous (note 27 h) | $ 510 | $ 447 | $ 447 | $ 510 | $ 510 | $ 638 | $ 574 |
Advertising | $14,167 | $14,167 | $14,167 | $14,167 | $14,167 | $14,167 | $14,167 |
Wages & Employee Benefits | $13,694 | $13,952 | $13,952 | $13,952 | $13,952 | $13,952 | $13,952 |
Research & Development | $10,425 | $10,453 | $10,453 | $10,453 | $10,453 | $10,453 | $10,453 |
Casual Labour | $ 900 | $ 0 | $ 0 | $ 900 | $ 0 | $ 0 | $ 0 |
Office Supplies | $ 0 | $ 0 | $ 412 | $ 0 | $ 0 | $ 412 | $ 0 |
Rent | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 |
Telephone/Fax | $ 320 | $ 340 | $ 340 | $ 340 | $ 340 | $ 340 | $ 340 |
Professional Services | $ 292 | $ 333 | $ 333 | $ 333 | $ 333 | $ 333 | $ 333 |
Business Insurance | $ 1,815 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Toll-free Charges above Variable | $ 1,864 | $ 2,033 | $ 1,779 | $ 1,779 | $ 2,033 | $ 2,033 | $ 2,541 |
Miscellaneous Charges | $ 233 | $ 233 | $ 233 | $ 233 | $ 233 | $ 233 | $ 233 |
Taxes Payable | $31,728 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Office Furniture | $ 0 | $ 2,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Office Equipment | $ 0 | $ 8,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Internet Storage & Accounts | $ 170 | $ 170 | $ 170 | $ 170 | $ 170 | $ 170 | $ 170 |
Dividends Paid (note 28) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $30,000 |
Net Cash Flow (Deficiency) | $-23,145 | $-21,560 | $3,704 | $10,261 | $ 5,026 | $24,204 | $-23,241 |
Plus Beginning Cash Balance | $61,968 | $38,823 | $17,263 | $20,967 | $31,228 | $36,254 | $60,457 |
The remaining five (5) months of J&B's third year Forecasted Cashflow Statement is presented below. Recall this is not the correct procedure - the third year cashflow statement should be developed in a spreadsheet program and should appear on one page.
Percentage of Total Sales (per month) | 8% | 7% | 10% | 9% | 9% | 100% |
Total Unit Sales/ Month) | 928 | 812 | 1,160 | 1044 | 1044 | 11,602 |
Diskette Sales (note 26) | 186 | 162 | 232 | 209 | 209 | 2320 |
CD Sales (note 26) | 603 | 528 | 754 | 679 | 679 | 7541 |
Internet Sales (note 26) | 139 | 122 | 174 | 157 | 157 | 1740 |
Weighed Average Selling Price (note 1) | $67.61 | $67.61 | $67.61 | $67.61 | $67.61 | |
Product Cost Inflation Rate | 10% | 10% | 10% | 10% | 10% | |
Cash From Product Sales (100%) | $62,753 | $54,909 | $78,441 | $70,597 | $70,597 | $784,411 |
Bad Debt Expense (1%) | $ 628 | $ 549 | $ 784 | $ 706 | $ 706 | $ 7,844 |
Purchase of Diskettes (note 27 a) | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,908 | $ 20,988 |
Purchase of CD (note 27 b) | $ 5,500 | $ 0 | $ 0 | $ 4,125 | $ 0 | $ 20,625 |
Credit Card Charges (note 27 c) | $ 3,193 | $ 2,794 | $ 3,991 | $ 3,592 | $ 3,592 | $ 39,911 |
Packaging Charges (note 27 d) | $ 505 | $ 442 | $ 631 | $ 568 | $ 568 | $ 6,311 |
Actual Shipping Charges (note 27 e) | $ 1,554 | $ 1,360 | $ 1,943 | $ 1,748 | $ 1,748 | $ 19,428 |
Toll Free Charges (note 27 f) | $ 2,287 | $ 2,033 | $ 1,779 | $ 2,541 | $ 2,287 | $ 24,985 |
Commission on Sales (note 27 g) | $ 1,149 | $ 1,021 | $ 893 | $ 1,276 | $ 1,149 | $ 12,550 |
Product Miscellaneous (note 27 h) | $ 510 | $ 447 | $ 638 | $ 574 | $ 574 | $ 6,381 |
Advertising | $14,167 | $14,167 | $14,167 | $14,167 | $14,167 | $170,000 |
Wages & Employee Benefits | $13,952 | $13,952 | $13,952 | $13,952 | $13,952 | $167,163 |
Research & Development | $10,453 | $10,453 | $10,453 | $10,453 | $10,453 | $125,411 |
Casual Labour | $ 900 | $ 0 | $ 0 | $ 0 | $ 900 | $ 3,600 |
Office Supplies | $ 0 | $ 412 | $ 0 | $ 0 | $ 412 | $ 1,650 |
Rent | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 | $ 13,230 |
Telephone/Fax | $ 340 | $ 340 | $ 340 | $ 340 | $ 340 | $ 4,060 |
Professional Services | $ 333 | $ 333 | $ 333 | $ 333 | $ 333 | $ 3,958 |
Business Insurance | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,815 |
Toll-free Charges above Variable | $ 2,287 | $ 2,033 | $ 1,779 | $ 2,541 | $ 2,287 | $ 24,985 |
Miscellaneous Charges | $ 233 | $ 233 | $ 233 | $ 233 | $ 233 | $ 2,800 |
Taxes Payable | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 31,728 |
Office Furniture | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 2,000 |
Office Equipment | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 8,000 |
Internet Storage & Accounts | $ 995 | $ 170 | $ 170 | $ 170 | $ 170 | $ 2,865 |
Dividends Paid (note 28) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 30,000 |
Net Cash Flow (Deficiency) | $2,665 | $3,068 | $25,252 | $12,174 | $13,715 | |
Plus: Beginning Cash Balance | $37,217 | $39,882 | $42,949 | $68,202 | $80,376 | |
As you can see, the above forecasted cash flow statements project J&B's cash inflows (from customers, from a bank loan and investors) and all expected cash outflow (from purchases of inventory, for advertising, for rent etc,) each month for thirty-six months. The inflows and outflows are subtracted and the difference is known as the Net Cash Flow (Deficiency). The cash at the beginning of the month is then added to the Net Cash Flow (Deficiency) to produce the Ending Cash Balance for the month.
Notice at the beginning of each cash flow statement, an ASSUMPTION section has been used. This assists the reader (investor) in understanding how the entrepreneur arrived at various values throughout the Cash Flow Statement (optional).
Also notice, after some of the account items, a note and a number is stated. These numbers refer to the Notes to the Financial Statements and allows readers (investors) the opportunity to see how J&B arrived at each account balance or value. This will become more apparent later on as we discuss Part C of the Financial Plan entitled "Notes to the Forecasted Financial Statements".
We can not stress enough that you should have three cash flow statements; one for each forecasted year. In addition, each cash flow statement will consist of a twelve month forecasted period; for a total of thirty-six months.
This concludes our discussion on how your forecasted cash flow statement should appear in your Financial Plan. Remember, it is imperative to understand the theory behind the cash flow statement before attempting to forecast your own. To learn more about this statement, please refer to the section entitled " The Cash-Flow Statement ". When you understand the theory behind each financial statement and analysis, you will be equipped with the tools necessary tools needed in Forecasting Your Own Forecasted Financial Statements .
4. FORECASTED BREAK-EVEN ANALYSIS
The next analysis to appear in your financial plan is the Forecasted Break-even Analysis. A Break Even Analysis, in its simplest form, is a tool used to determine the level of sales a business must earn in order to achieve neither a profit nor a loss. In other words, the point at which a business' Net Income is ZERO (revenues - expenses = 0).
The break-even analysis focuses mainly on the items included in a company's income statement (revenues and expenses). Moreover, the Break-even Analysis relies on your forecasted Fixed Costs, your forecasted Variable Costs and your forecasted Selling Price(s). Forecasted Fixed Costs are costs and expenses that do not fluctuate with sales increases or decreases. Forecasted Variable Costs are costs and expenses that do fluctuate with sales increases or decreases. A Forecasted Selling Price (s) is the price or prices you plan to sell your product at.
Your Forecasted Break-even analysis can consist of one page or two pages; depending upon how much detail you decide to offer. For example, J&B Incorporated's forecasted break-even analysis, presented below, consists of two parts. PART A. provides the reader with all information required in making the break-even calculation, and PART B shows the actual break-even calculation.
Selling Price per unit (note 1) | $73.89 | $68.01 | $67.61 |
Weighted Average Variable Cost per unit | $16.50 | $14.79 | $12.10 |
Advertising Expense (note 3) | $130,000 | $150,000 | $170,000 |
Wages & Employee Benefits (note 4) | $122,366 | $136,153 | $167,421 |
Casual Labor (note 5) | $ 2,400 | $ 3,000 | $ 3,600 |
Office Supplies (note 6) | $ 1,500 | $ 1,715 | $ 1,908 |
Rent Expense (note 7) | $ 12,000 | $ 12,600 | $ 13,230 |
Telephone/Fax Expense (note 8) | $ 3,600 | $ 3,840 | $ 4,080 |
Professional Services (note 9) | $ 7,000 | $ 3,500 | $ 4,000 |
Insurance Expenses (note 10) | $ 1,500 | $ 1,650 | $ 1,815 |
Toll-free Charges above Variable Cost (note 11) | $ 15,685 | $ 20,706 | $ 25,408 |
Bad Debt Expense (note 12) | $ 5,824 | $ 6,738 | $ 7,844 |
Interest on Operating Loan (note 13) | $ 2,000 | $ nil | $ nil |
Internet Storage & Accounts Expense (note 14) | $ 2,550 | $ 2,700 | $ 2,865 |
Miscellaneous Expenses (note 15) | $ 2,400 | $ 2,600 | $ 2,800 |
Depreciation Expense - Equipment (note 16) | $ 3,142 | $ 4,392 | $ 6,392 |
Depreciation Expense- Furniture (note 17) | $ 606 | $ 906 | $ 1,306 |
Amortization of Initial Development Costs (note 18) | $ 15,924 | $ 15,924 | $ 15,924 |
Amortization of Future Development Costs (note 19) | $ 24,720 | $ 55,215 | $ 86,575 |
Forecasted Sales in units per year | = | 7,882 units | 9,907 units | 11,602 units |
Forecasted Sales above Break-even | = | 1,727 units | 1,984 units | 2,321 units |
J&B is forecasting sales of 1,727 units above its break-even point in year one, 1,984 units above break-even in year two and 2,321 units above break-even in year three. |
In the above example, notice that J&B calculates its break-even point and provides an indication of how many units it plans to sell above its break-even point. To do this, J&B simply subtracts each years' forecasted break-even point from the number units it plans to sell in each forecasted year.
Also notice, J&B provides readers with all figures needed to calculate the break-even point. You may elect to use this format or you may decide to only provide the break-even calculations. Whichever format you decide, be sure your break-even point is calculated over a three year period - one column for each forecasted year. You may also decide to provide the reader with an explanation on why your forecasted break-even point is increasing or decreasing. For example, J&B's break-even point is increasing due to the company's planned decrease in its selling price, its estimated increase in variable costs, and its planned increase in fixed costs. As a result, the company is earning a lower contribution margin on each sale made during year two and three. Thus less "money" is contributing to their higher fixed costs.
This concludes our discussion on how your projected break-even analysis should appear in your Financial Plan. Remember, it is imperative to understand the theory behind the break-even analysis before attempting to forecast your own. To learn more about this financial analysis, please refer to the section entitled " The Break-even Analysis ". When you understand the theory behind each financial statement and analysis, you will be equipped with the tools necessary tools needed in Forecasting Your Own Forecasted Financial Statements .
5. SENSITIVITY ANALYSIS
A sensitivity analysis shows the effects on Net Income when forecasted sales are increased or decreased by various percentages. Since your forecasted sales will NEVER be one hundred percent accurate, the sensitivity analysis shows investors how your net income will change if your original sales forecast increases by 30%, 20% and 15% or if your original sales forecast decreases and a 15% or 20 %, for example. The percentages chosen for your sensitivity analysis is up to you, however, avoid percentages of 14% or lower.
Many entrepreneurs develop only one sensitivity analysis ( for their first year operation). Others develop three sensitivity analysis; one for each forecasted year of operation. Whichever format you plan to use is not important, what is important, however, is that you include this analysis in your business plan. It shows the investor that you understand; 1) the forecasting process and 2)that your original sales forecasts generally do NOT materialize as envisioned.
Like Break-even Analysis, the Sensitivity Analysis uses your forecasted income statement as its starting point. The analysis relies on distinguishing between Forecasted Fixed Costs and Forecasted Variable Costs. Recall, Forecasted Fixed Costs are costs and expenses that do not fluctuate with sales increases or decreases. Forecasted Variable Costs are costs and expenses that do fluctuate with sales increases or decreases.
Below provides an example of J&B's sensitivity analysis for its first forecasted year of operations. Notice, J&B has chosen a sales percentage increase of 15% of its original sales forecast and a sales percentage decrease of 20% of its original sales forecast.
| | | |
Sales in Units (note 1) | 6,306 units | 7,882 units | 9,064 units |
Weighted Average Selling Price (note 1) | $73.89 | $73.89 | $73.89 |
Cost of Goods Sold (note 2) | $104,153 | $130,191 | $149,720 |
: | |||
Advertising Expense | $130,000 | $130,000 | $130,000 |
Wages & Employee Benefits | $122,366 | $122,366 | $122,366 |
Casual Labor | $ 2,400 | $ 2,400 | $ 2,400 |
Office Supplies | $ 1,500 | $ 1,500 | $ 1,500 |
Rent Expense | $ 12,000 | $ 12,000 | $ 12,000 |
Telephone/Fax Expense | $ 3,600 | $ 3,600 | $ 3,600 |
Professional Services | $ 7,000 | $ 7,000 | $ 7,000 |
Insurance Expenses | $ 1,500 | $ 1,500 | $ 1,500 |
Toll-free above Variable | $ 15,685 | $ 15,685 | $ 15,685 |
Bad Debt Expense (note 12) | $ 5,824 | $ 5,824 | $ 5,824 |
Interest on Operating Loan | $ 2,000 | $ 2,000 | $ 2,000 |
Internet Storage & Accounts | $ 2,550 | $ 2,550 | $ 2,550 |
Miscellaneous Expenses | $ 2,400 | $ 2,400 | $ 2,400 |
Depreciation Exp. - Equipment | $ 3,142 | $ 3,142 | $ 3,142 |
Depreciation Exp.- Furniture | $ 606 | $ 606 | $ 606 |
Amortization of Initial R&D Costs | $ 15,924 | $ 15,924 | $ 15,924 |
Amortization of Future R&D Costs | $ 24,720 | $ 24,720 | $ 24,720 |
Net Income Before Taxes | $ 8,579 | $ 98,992 | $166,801 |
Less: Estimated Tax Rate (30%) | $ 2,574 | $ 29,698 | $ 50,040 |
* All Operating Expenses are considered Fixed Costs. ** The only Variable Cost is J&B's Cost of Goods Sold. *** Figures are rounded. |
Notice, J&B's forecasted Operating Expenses are considered to be Fixed Costs (they do not fluctuate with sales increases or decreases. Also, the company's Variable Costs, in this example, include only the Cost of Goods Sold (COGS will always fluctuate with sales increases or decreases and therefore will always be considered variable). The only other item, in the above example, that fluctuates with sales is Sales itself! In other words, if you increase the original forecasted sales by a certain percentage, then sales will have to increase by that amount (in units sold and in dollars). Alternatively if you decrease the original sales forecast by any amount, then SALES in units sold and in dollar will certainly change by that amount or percentage.
This concludes our discussion on how your projected sensitivity analysis should appear in your Financial Plan. Remember, it is imperative to understand the theory behind the sensitivity analysis before attempting to forecast your own. To learn more about this financial analysis, please refer to the section entitled " The Sensitivity Analysis ". When you understand the theory behind each financial statement and analysis, you will be equipped with the tools necessary tools needed in Forecasting Your Own Forecasted Financial Statements .
6. RATIO ANALYSIS
The next analysis appearing in the financial plan should be your Forecasted Ratio Analysis. In a nutshell, Ratio Analysis is a general technique for analyzing the performance of an existing or potential business.
Ratios involve dividing numbers from the Balance Sheet and Income Statement to create percentages and decimals. When aspiring entrepreneurs and existing business owners apply for a loan, for example, bankers usually look at their forecasted ratios and compare them to ratios of other businesses operating within the same industry.
Your projected ratios should be calculated over a three year forecasted period. Many business plan writers calculate the ratios and provide a narrative discussion, depicting how each has changed over the three year forecasted period. Others calculate the ratios and provide a footnote stating "a complete analysis regarding the forecasted ratios is available upon request. Yet other business plan writers feel the need to calculate various ratios and compare them to ratios of other businesses within the industry. The later approach can be time consuming and may not be "cost effective". Below provides an example of J&B's forecasted Ratio Calculations.
Current Assets Current Liabilities | = | $67,894 $36,359 | $67578 $39051 | $98410 $43649 |
Current Assets -Current Liabilities Current Liabilities | = | $31,535 $36,359 | $28,526 $39,051 | $54,761 $43,649 |
Total Debt Total Assets | = | $36,359 $185,753 | $39,051 $237,477 | $43,649 $293,553 |
: | ||||
Total Debt Total Equity | = | $ 36,359 $149,394 | $ 39,051 $198,426 | $ 43,649 $249,904 |
: | ||||
Net Income after tax Sales | = | $ 69,294 $582,401 | $ 74,032 $673,775 | $81,478 $78,441 |
: | ||||
Net Income after tax Total Equity | = | $ 69,294 $149,394 | $ 74,032 $198,426 | $ 81,478 $249,904 |
NOTE: Complete analysis on above ratios is available upon request . |
Notice the information provided in the above example. The name of each ratio, the formula required in calculating each ratio, the dollar amounts for each formula item, and the ratio calculation for each of the forecasted years. It is important to stress that these dollar amounts have been taking from J&B's forecasted Balance Sheet and Forecasted Income Statement. Therefore, the forecasted balance sheet and income statement must be complete before ratios can be calculated.
Also notice that J&B decided to calculate the ratios without providing any narrative discussion. Moreover, the company states that a "complete analysis is available upon request". If you want to impress the investor, it might in your best interest to provide the ratio analysis (narrative discussion) in your business plan. To do this, simply calculate each ratio for the three year forecasted period and then briefly discuss the variables attributing to change in ratio value.
This concludes our discussion on how your projected ratio analysis should appear in your Financial Plan. Remember, it is imperative to understand the theory behind the ratio analysis before attempting to forecast your own. To learn more about how to read or determine the meaning behind ratios, please refer to the section entitled " Ratio Analysis ". This section will also provide you with other ratio formulas which you may decide to include in your analysis.
This concludes PART B of the financial plan entitled "Forecasted Financial Statements".The purpose of this section was not to show you how to develop forecasted financial statements, rather the purpose was to show you how the statements generally appear in the Financial Plan.
To learn the theory behind each financial statement, please refer to the section entitled " Learning and Understanding Financial Statements ". To learn how to forecast your own financial statements, please refer to the section entitled " Forecasting your Own Financial Statements ".
In summary, be sure your forecasted financial statements and analysis provide for a three year forecasted period and include the following;
Forecasted Income Statements | all on one page |
Forecasted Balance Sheets | all on one page |
Forecasted Cash Flow Statements | one page for each cash flow statement |
Break-even Analysis | Calculations on one page, analysis is unlimited |
Sensitivity Analysis | One page for each sensitivity, analysis is unlimited |
Ratio Analysis | on one to three pages depending upon your format |
Please Note: as mentioned earlier, you will save yourself time and money if you develop the above financial items using a spreadsheet program.
PART C - NOTES TO THE FINANCIAL STATEMENTS
The third and final part of the financial section of the Business Plan is known as the notes to the forecasted financial statements. Notes to the Forecasted Financial Statements summarize the "activities" and "assumptions" made when creating the forecasted financial statements.. The Notes will give the readers (bankers, investors, and other readers) the necessary information needed to understand and comprehend your forecasts and projections. It also alleviates any guessing or questioning a reader may have when analyzing the financial section of the business plan. NOTE: never, ever, ever, create the notes to the forecasted financial statements until you have" fully completed" all forecasted statements and analysis.
There is no set structure nor specific guideline that dictate which topics should be included in the notes to the financial statements. Rather it is left up to the individual to decide which items warrant a "note" and which items are self explanatory. The following list provides some suggestions you may use when creating your notes section.
Sales Forecast note to the financial statements |
Gross Margin note to the financial statements |
Management and Staff note to the financial statements |
Office or Store Supplies note to the financial statements |
Bad Debt Expense Rate note to the financial statements |
Marketing Expenses Breakdown note to the financial statements |
Income Tax Rate notes to the financial statements |
Income Tax Payable note to the financial statements |
Net Income note to the financial statements |
Accounts Receivable note to the financial statements |
Personal Assets Invested by the Owner note to financial statements |
Fixed Asset Purchases note to the financial statements |
Total Fixed Assets Available note to the financial statements |
Deprecation Rates on Fixed Assets note to the financial statements |
Inventory note to the financial statements |
Accounts Payable note to the financial statements |
Short-term Loans note to the financial statements |
Long-term Debt (mortgage) note to the financial statements |
Sales Tax note to the financial statements |
Owner (s)Capital Account note to the financial statements |
Retained Earnings note to the financial statements |
Dividend Distribution note to the financial statements |
Your notes should provide details on each of the required three year forecasted periods. Below provides a link to J&B's Notes to the Forecasted Financial Statements. BUT FIRST - recall from above, the word "note" and a "number" followed several account items on J&B's forecasted income statement, balance sheet and cash flow statement, etc. For instance, on the company's income statement, an account called revenue from sales is present. Following the revenue from sales account is a "note 1". This refers to the first note under the Notes to the Forecasted Financial Statements. When investors read J&B's income statement and see note 1 beside the account item entitled "Total Revenue From Sales", they can quickly refer to the Notes section for information on how the entrepreneur arrived at these dollars amounts. As a result, the investor better understands the financial statements and the assumptions used when creating them. . Try is yourself - print off all J&B's financial statements and refer to the Notes below. You'll find your understanding of the financial statements as well as the company's initiatives is much better. Remember, when investors understand your financial projections, it reduces their risk, and in many cases, it increases your chances of receiving financing.
Link to: J&B Incorporated's Notes to their Forecasted Financial Statements
For additional information on this topic, please refer to the section entitled " Notes to the Financial Statements ".
CONCLUSION OF THE FINANCIAL PLAN
This concludes our discussion on the Financial Plan section of a business plan. Remember the Financial Plan generally consists of three parts:
The Introduction |
The Forecasted Financial Statements |
The Notes to the Forecasted Financial Statements |
Below provides examples of how your Financial Plan should appear in its entirety. (Please note, the financial statements and analysis for two of the examples below; namely The Internet Company and Scholarship Information Services provide forecasts for a two year period. Your financial statements and analysis, however, generally provide projections for at least a three year period.
EXAMPLES OF THE FINANCIAL PLAN SECTION OF A BUSINESS PLAN J&B Incorporated Scholarship Information Services The Internet Company
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Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.
If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.
Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.
You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.
Let’s get started.
Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.
One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.
For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.
A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.
Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.
A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:
A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.
You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.
A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.
Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.
You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.
You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.
Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.
In your business plan, your marketing strategy must answer the questions:
1. create your executive summary.
The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.
Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.
A good executive summary should do the following:
The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.
Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.
View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:
Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.
The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.
If you are writing your business plan for your planning purposes, you do not need to write the executive summary.
The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.
Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.
Your company overview should contain the following:
When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.
If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.
After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.
The company description or overview section contains three elements: mission statement, history, and objectives.
The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.
Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”
When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:
When you fill in this information, you use it to write one or two paragraphs about your company’s history.
Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.
The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.
Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.
This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.
Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?
You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.
Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?
Illustrate the competitive landscape as well. What are your competitors doing well and not so well?
Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.
Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.
Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.
The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.
A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.
To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.
The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.
Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.
You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.
How to Quantify Your Target Market
One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:
What Does a Good Market Analysis Entail?
Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.
You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:
The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.
Here are some questions you can answer that can help you position your product or service in a positive light to your readers.
Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.
In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.
Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.
Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.
The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.
Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.
When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.
Find answers to the following questions after you have identified who your competitors are.
If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.
If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.
Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.
The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.
Direct vs Indirect Competition
You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.
There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.
If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.
In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.
For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.
There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.
Factors that Differentiate Your Business from the Competition
There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.
1. Cost Leadership
A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.
A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.
2. Product Differentiation
Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.
Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.
3. Market Segmentation
As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.
If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.
The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.
Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.
If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.
Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.
The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.
Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.
The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.
Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.
A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.
Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.
Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.
If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.
1. Avoid Adding ‘Ghost’ Names to Your Management Team
There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.
Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.
2. Focus on Credentials But Pay Extra Attention to the Roles
Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.
While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.
Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.
If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.
An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.
You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.
In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.
Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.
The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.
If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”
Your product and service section in your business plan should include the following:
In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.
When describing the benefits of your products or services, here are some key factors to focus on.
When describing the product life cycle of your products or services, here are some key factors to focus on.
When describing the production process for your products or services, you need to think about the following:
1. Avoid Technical Descriptions and Industry Buzzwords
The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.
A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.
2. Describe How Your Products or Services Differ from Your Competitors
When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.
If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.
For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.
3. Long or Short Products or Services Section
Should your products or services section be short? Does the long products or services section attract more investors?
There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.
If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.
Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.
The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.
If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.
A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.
4. Describe Your Relationships with Vendors or Suppliers
Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.
Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.
5. Your Primary Goal Is to Convince Your Readers
The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.
When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.
While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.
Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.
Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.
You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.
Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.
The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.
There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.
In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.
The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).
Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.
Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.
Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.
Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.
Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.
Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.
Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?
Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market
After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.
All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.
Here is a simple template you can use to develop a positioning statement.
For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].
For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.
“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”
You can edit this positioning statement sample and fill it with your business details.
After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.
Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.
You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.
Basic Rules to Follow When Pricing Your Offering
Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.
Pricing Strategy
Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.
After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.
As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.
There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.
Advertising
Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.
Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.
Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.
A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.
Public Relations
A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.
Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.
Content Marketing
Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,
Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.
Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.
If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.
Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.
When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.
Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.
You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.
Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.
Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.
You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.
If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.
Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.
The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.
Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.
1. Focus on Your Target Market
Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.
2. Evaluate Your Competition
One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.
You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.
These questions can help you know your competition.
3. Consider Your Brand
Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.
4. Focus on Benefits
The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.
Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.
5. Focus on Differentiation
Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.
You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.
The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.
If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’
A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.
Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.
In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.
Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.
If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.
When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.
Case for Equity
If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.
Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.
Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.
Case for Debt
You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.
When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.
Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.
Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.
You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.
The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.
If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.
You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.
If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .
Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.
If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.
The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.
If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.
Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.
If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.
When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.
The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.
Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.
Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.
The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.
Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.
Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.
You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.
The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.
A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.
Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.
1. Sales Forecast
Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.
One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.
For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.
Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.
Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.
For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.
2. Personnel Plan
The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.
However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.
The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.
3. Income Statement
The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.
Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.
The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.
4. Cash Flow Statement
The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.
5. Balance Sheet
The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.
You can get the net worth of your company by subtracting your company’s liabilities from its assets.
6. Exit Strategy
The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.
You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.
Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.
Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.
Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.
You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.
Here are some key questions to answer to help you develop this section.
Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.
The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.
When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.
Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.
You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.
If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.
A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.
The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.
People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.
The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:
Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.
To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.
When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.
The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.
Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.
Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.
To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.
When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.
Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.
The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.
In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.
The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.
To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.
When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.
One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.
Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.
You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.
To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.
A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.
For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.
To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.
This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:
Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.
When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.
You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.
In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.
Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.
1. hubspot's one-page business plan.
The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.
Hubspot’s one-page business plan template is divided into nine fields:
Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.
The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.
HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.
The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.
There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.
My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.
The comprehensive template consists of a whopping 15 sections.
There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.
Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.
The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.
There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.
The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.
The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .
There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.
The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.
There are five sections in the two SBA’s free business plan templates.
The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.
There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.
The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.
There are 11 sections in PandaDoc’s free business plan template.
You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)
PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.
InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.
Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.
A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.
Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.
The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.
The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.
The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.
The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.
Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:
While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.
Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.
Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.
Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.
Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.
It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.
Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.
Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time. They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.
Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans. A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.
A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs. Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.
The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.
A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.
Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.
Martin luenendonk.
Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.
This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.
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Updated: Apr 17, 2024, 11:59am
Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.
Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.
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An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.
When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.
After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business.
The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.
Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.
Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.
Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.
Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.
The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.
If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.
This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.
You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.
Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.
Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.
Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.
Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.
Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.
When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.
The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.
When writing out a business plan, you want to make sure that you cover everything related to your concept for the business, an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.
Julia is a writer in New York and started covering tech and business during the pandemic. She also covers books and the publishing industry.
Written by: Raja Mandal
Evaluating your company’s financial performance is great. But planning for the future is just as important.
Sound financial projections give startups and established businesses a significant boost in making informed decisions and preparing for unexpected events. It forecasts estimated cash flow, sales, expenses, profit and other financial results you plan to achieve.
But that’s not all. When seeking funding, financial projections not only validate your business to investors or partners but also convince them of its growth potential.
So, how do you create one? Financial projection templates make the entire process a breeze. In this article, we’ve compiled 14 financial projection templates to simplify your financial planning process and help you make well-informed business decisions.
What is a financial projection.
Financial projections faqs.
A financial projection is a forecast of a business's future financial performance. It helps you estimate critical financial figures, such as revenues, expenses and profits, over a specific period.
By creating financial projections, business owners can plan, make informed decisions, and prepare for various possibilities. These predictions also act as a roadmap to guide growth, attract investors and estimate profitability.
Therefore, financial projections are necessary to run a business successfully, regardless of size and type.
Here's an example of what a financial projection document looks like and the insights it offers.
When creating a financial projection, there are three main sections you should focus on. These are the income statements, cash flow projections and balance sheet projections.
This is the storyteller of your company's performance, focusing on four essential items: revenue, expenses, gains and losses over a specific period. It reflects the results of your business operations and provides insights into whether you are losing or making money.
The income statements display your company's revenue, gross margin, costs, gross profit, taxes paid, marketing and other expenses.
This example shows your projected income statements.
Cash flow projections forecast the amount of money expected to come in and go out over a specific period. This report will help you manage your business operations and payments more effectively, especially during negative cash flow.
Additionally, it provides a quick overview of your company's liquidity and short-term financial stability.
The balance sheet projection gives you a bird's eye view of your business's financial health. It forecasts your assets, liabilities and equity. By incorporating it into your financial projection, you can predict your financial status, plan for funding requirements and assure stakeholders about the financial stability of your business.
RELATED READING: 11 Best Financial Dashboards to Track Sales, KPIs & Metrics
Use these comprehensive templates to analyze and forecast your business's financial future. The templates are fully customizable, ranging from presentations and reports to budgets and tables.
Choose your template wisely and customize it using Visme’s budget planner .
Visme's tools and templates have enabled thousands of businesses across the globe to create valuable documents even with little or no design knowledge.
But don’t just take our word for it. Here's what one of our satisfied users has to say about Visme.
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This financial projection template is designed to transform your data into meaningful insights. It provides a clear and concise overview of your financial projections, including income statements, balance sheets, assets, liabilities and equity.
The tool offers unique features—such as radial gauges for income statement predictions and a dual chart—that visually illustrate total liabilities and equity. Additionally, the template showcases balance sheet ratios across different countries using an innovative vertical bar graph, providing a global perspective.
Visme's AI presentation maker can help you create professional-looking financial projection presentations in just a few minutes. This advanced tool simplifies the design process and helps you reduce the time spent on presentation design.
Provide your prompt, choose your preferred style, and the tool will generate everything - including the text, images and illustrations.
Here's a template that looks similar to the previous one but comes in a different color. However, with Visme, you don't have to restrict yourself to a limited color palette. In the editor, you can use the color wheel to create your own unique colors, apply a specific HEX code or choose from any of the color presets available.
Whether reviewing your company's finances or presenting to stakeholders, this balance sheet presentation template is a great way to show your financial projection.
It's designed with separate slides for different financial aspects, such as assets, liabilities and stockholder equity. The template also separates current and long-term liabilities into distinct slides and tables, making it easy to organize your financial data.
Turn numbers and statistics from your balance sheet into beautiful, meaningful visuals using Visme's data visualization tools . Visme offers 30+ data widgets such as radial gauges, progress bars, population arrays and many others to help you visualize data.
For larger data sets, you can choose from 20+ types of charts and graphs, including bar graphs , line graphs , pie charts and more.
A well-audited financial report is crucial for financial projections and this template provides a classic way to communicate your findings effectively without drowning in numbers.
This comprehensive template presents asset data, including current and fixed assets and other elements such as income statements, cash flow, liabilities and partners' capital deficits. It displays detailed information in organized tables, with the added clarity of table and bar graphs for income statements.
Using this template makes it easy for you to spot trends and make forecasts in your business finances.
Are you looking for a way to save time on report creation? Visme's AI report writer is the solution you need. Whether you are compiling a quarterly financial summary or an end-of-year financial analysis, the tool guides you through the process.
All you need to do is generate your first draft report using a prompt. Once you've done that, you can choose a style and the tool will generate text, graphics and visuals to match. And if you want to make further tweaks, customize the template until you're happy with the final design.
Illustrate your company's financial performance to ensure accuracy for tax, financing or investing purposes using this financial statement presentation template.
This template combats information overload by focusing on key facts, presented with minimal text and maximized data visibility. The creative use of icons and images reinforces information, making it more digestible and engaging. It's the perfect tool to present complex financial figures and estimates in an appealing and easy-to-understand format.
And if you need help writing the content for your financial projection templates, Visme’s AI writer is here to help. It can draft an entire financial statement, create a structure for your presentation and even proofread your text for grammatical or syntax mistakes.
Need to summarize a hefty report? Visme AI Writer can do it. Need persuasive CTAs for your stakeholders? It has you covered. All you need to do is explain what you want the tool to do for you and you're good to go.
The financial analysis presentation template empowers you to create a vivid, compelling narrative about your organization's financial health. It focuses on critical financial elements such as the profit vs. loss landscape, project earning capacity, assets and the operating profitability ratio.
With this template, you can easily translate complex figures into a simplified visual language that anyone can understand. You can quickly and efficiently explain your financial standpoints by examining assets and disclosing your operating profitability ratio.
Apply your brand's visual identity to your financial projection templates easily using Visme's brand design tool .
Simply copy and paste your website URL and the brand wizard will extract your brand colors , brand fonts and company logo from your website. Once saved, anyone from your team can apply your branding elements to any design with a single click.
This will help you establish credibility and reinforce your brand identity while presenting financial insights to stakeholders and team members.
The company finance report template simplifies how you analyze your business's finances. It clarifies the amount of money your company has and the amount it owes by breaking down assets and liabilities. It also allows you to compare your expected financial outcomes with the actual results, guiding you to stay on track.
Additionally, it summarizes financial market movements, helping you understand how your company fits into the larger financial landscape. It makes tracking your monthly operational expenses smoother, enabling you to manage costs effectively.
A budget template makes it easy for you to plan and control financial activities in your business.
This company financial budget template helps you navigate the crucial aspects of budgeting, such as salaries, operating expenses and other miscellaneous costs. It strengthens your budgeting process with detailed income statements, ensuring you have a comprehensive view of your cash inflows, outflows and net cash flow.
Use Visme's dynamic fields feature to maintain consistency across all your financial projection documents. Create custom fields such as costs, revenue projections, profit margins or anything else you want.
Whenever you update the information, the tool automatically updates all the other documents or projects containing these fields. This way, you can ensure that your financial projections are always up-to-date and accurate.
Use this template to plan your company's operating budget and create the sales forecast, the crucial elements for financial projections. It provides a detailed revenue and expense expectations plan, enabling you to predict future financial performance, strategically allocate resources and make informed decisions to achieve your financial goals.
It helps you simplify your company's cash flow and guides you toward fiscal targets with precision for upcoming periods or long-term planning.
Creating financial projection documents can be a complex task. It often requires the active collaboration of different members across an organization.
Visme's design collaboration tools can help simplify this process. It brings transparency, efficiency and security to the task.
With Visme, you can share the financial projection template with your team by sending email invitations or sharing a project link. It allows them to leave comments, annotate specific elements and edit the document together.
Accurate tracking of expenses and smart budgeting are essential for the success of any business. This company expenses report template is designed to be your perfect companion in achieving this. It helps you systematically categorize your major corporate expenses, such as employee, office and marketing.
This template is not just a record of what you spend. It's also a tool to help you identify potential areas where you could better allocate the budget. It highlights sections where the expenditure proves beneficial, deserving more allocation and points out those costs you could cut.
With Visme's workflow management features , customizing your financial project and expense reports templates becomes more efficient and organized. You can assign specific tasks to team members and manage roles, tasks, progress and deadlines in one place.
Forecasting a company’s financial future is no small task. The financial projection template is a comprehensive yet concise one-pager that provides a data tableau for each year over a specific period.
It features information about debts, liabilities, overdue amounts, assets and a detailed snapshot of your company’s financial status.
This template ensures key stakeholders can quickly grasp your financial standing and predict future trends. Besides the concise presentation, the template can be a valuable tool for strategists and analysts conducting in-depth studies on the company’s financial health.
The cash flow financial model table template is an easy-to-use tool that helps you manage and comprehend your business' finances. This template includes sections for all of your financial activities. It begins with the income earned from sales, grants and refunds.
Then, there is a segment that lists all the expenses of running your business, from buying supplies to paying for advertisements or investing in the growth of your business. All of this data allows you to determine whether you are earning more money than you are spending or the opposite.
The monthly operating expenses dashboard template is an invaluable resource for keeping track of your financial activity and budget effectively. This template visually represents your company's monthly expenses, clearly showing expenditures across different categories, such as salaries, utilities and office supplies.
Using this organized and concise dashboard, you can quickly assess your spending, identify cost-saving opportunities and make more informed operational decisions to maintain financial stability.
With Visme's animation and interactivity tools , you can bring your financial projection templates to life.
With these tools, you can create interactive elements such as clickable menus, pop-ups, hover effects and more. You can add animated icons, illustrations and special effects to make the document more engaging.
With an intuitive and visually appealing layout and bar graphs, this dashboard displays critical financial metrics, including revenue, net profit and cash flow. The dashboard makes it easy for financial analysts to compare the current and previous month's performance and calculate the month-on-month change.
Seamlessly integrate your favorite applications like HubSpot , Salesforce and Mailchimp with Visme. This integration lets you export your charts, graphs and dashboards into third-party platforms for real-time insights into your financial performance.
For instance, you can integrate Salesforce data into your Visme documents to get live sales pipeline data and customer behavior that directly influences your financial projections.
Creating financial projections is straightforward with Visme. Just follow these three simple steps:
First things first, head over to the Visme website. If you're new, sign up for an account using your name and email address. If you already have an account, simply log in.
Once you're in, browse through Visme's collection of templates and pick one for financial projections. You’ll find a design that aligns well with your business needs and aesthetics.
The next step is to make that template yours. There are many ways to customize your templates in Visme.
One of the first steps in customizing the template includes adjusting the projected revenue forecasts, expense estimates and other figures. You'll find preset numerical values you can replace with your own to make the document valid for your business.
Insert your company's name, address, and other details into the template. This will make the template uniquely yours and aid in better business recognition.
Visme lets you change fonts and colors according to your liking or brand image. You can use Visme's color wheel to create your own colors, copy-paste a HEX code or choose from the color presets.
Also, Visme comes with various fonts and font combinations that you can choose from.
To visualize more extensive data sets, you can choose from 20+ types of charts and graphs . Or, use the data widgets like progress bars, population arrays and radial gauges to visualize smaller data sets.
Edit the existing data visualizations to input your own values just by clicking on them and changing them from the sidebar.
After fine-tuning your financial projection, it's time to download and share it . Download your document in formats like PDF, JPG or PNG for offline use.
If you want to share it directly with colleagues or stakeholders online, Visme allows you to generate a shareable link. You can even publish your work online by generating a snippet of code to embed it on your website or landing page.
Financial projections are crucial for several reasons:
Businesses use financial projections for these purposes below
To calculate financial projections for a business plan, you will need to estimate the future revenue, expenses and cash flow of your business.
A 3 year financial projection is a document that estimates a company's future financial position based on expected revenues, expenses and cash flow over a three-year period.
Here's how you can make a 3-year financial projection:
No, a financial projection is not the same as a financial plan. A financial projection forecasts future revenue and expenses, estimating how much money the company may make or spend. A financial plan is broader; it outlines the business's financial goals and how to achieve them, including savings, investments and budgeting.
No, though often used interchangeably, financial forecasts and financial projections are not the same. A financial forecast predicts the financial outcomes in the near future based on current conditions and expected short-term trends. In comparison, a financial projection is a calculation that shows what could happen if the business performs in a certain way.
In other words, a forecast is based on current conditions, whereas projections are based on potential scenarios.
A financial projection is like a weather forecast but for your business! It's your best guess of how much money your business will make (revenues), how much it will spend (expenses), and what will be left after paying everything off (profits) in the future.
Creating financial projections is always challenging and time-consuming. But it's worth the effort to create a financial projection to help you make better decisions about your business.
With Visme, crafting financial projections becomes straightforward. All you need is your financial data, a Visme account, and a few minutes. You can use the financial projection templates provided in this article as a starting point and customize them using Visme’s advanced tools.
Besides financial documents, Visme also helps create various documents for different teams, such as marketing , human resources , training and development , and others. This way, Visme ensures you have all the documents you need to run and grow your business successfully.
Sign up for Visme today and take your financial projections to the next level.
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Raja Antony Mandal is a Content Writer at Visme. He can quickly adapt to different writing styles, possess strong research skills, and know SEO fundamentals. Raja wants to share valuable information with his audience by telling captivating stories in his articles. He wants to travel and party a lot on the weekends, but his guitar, drum set, and volleyball court don’t let him.
Reviewed by subject matter experts.
Updated on September 02, 2023
Table of contents, financial plan overview.
A financial plan is a comprehensive document that charts a business's monetary objectives and the strategies to achieve them. It encapsulates everything from budgeting and forecasting to investments and resource allocation.
For small businesses, a solid financial plan provides direction, helping them navigate economic challenges, capitalize on opportunities, and ensure sustainable growth.
The strength of a financial plan lies in its ability to offer a clear roadmap for businesses.
Especially for small businesses that may not have a vast reserve of resources, prioritizing financial goals and understanding where every dollar goes can be the difference between growth and stagnation.
It lends clarity, ensures informed decision-making, and sets the stage for profitability and success.
Role of financial planning in business success.
Financial planning is the backbone of any successful business endeavor. It serves as a compass, guiding businesses toward profitability, stability, and growth.
With proper financial planning, businesses can anticipate potential cash shortfalls, make informed investment decisions, and ensure they have the capital needed to seize new opportunities.
For small businesses, in particular, tight financial planning can mean the difference between thriving and shuttering. Given the limited resources, it's vital to maximize every dollar and anticipate financial challenges.
Through diligent planning, small businesses can position themselves competitively, adapt to market changes, and drive consistent growth.
Every financial plan comprises several core components that, together, provide a holistic view of a business's financial health and direction. These include setting clear objectives, estimating costs , preparing financial statements , and considering sources of financing.
Each component plays a pivotal role in ensuring a thorough and actionable financial strategy .
For small businesses, these components often need a more granular approach. Given the scale of operations, even minor financial missteps can have significant repercussions.
As such, it's essential to tailor each component, ensuring they address specific challenges and opportunities that small businesses face, from initial startup costs to revenue forecasting and budgetary constraints.
Identifying business's short-term and long-term financial goals.
Every business venture starts with a vision. Translating this vision into actionable financial goals is the essence of effective planning.
Short-term goals could range from securing initial funding and achieving a set monthly revenue to covering startup costs. These targets, usually spanning a year or less, set the immediate direction for the business.
On the other hand, long-term financial goals delve into the broader horizon. They might encompass aspirations like expanding to new locations, diversifying product lines, or achieving a specific market share within a decade.
By segmenting goals into short-term and long-term, businesses can craft a step-by-step strategy, making the larger vision more attainable and manageable.
Profitability and cash flow, while closely linked, are distinct concepts in the financial realm. Profitability pertains to the ability of a business to generate a surplus after deducting all expenses.
It's a metric of success and indicates the viability of a business model . Simply put, it answers whether a business is making more than it spends.
In contrast, cash flow represents the inflow and outflow of cash within a business. A company might be profitable on paper yet struggle with cash flow if, for instance, clients delay payments or unexpected expenses arise.
For small businesses, maintaining positive cash flow is paramount. It ensures that they can cover operational costs, pay employees, and reinvest in growth, even if they're awaiting payments or navigating financial hiccups.
Fixed vs variable costs.
When embarking on a new business venture, understanding costs is paramount. Fixed costs remain consistent regardless of production levels. They include expenses like rent, salaries, and insurance . These are predictable outlays that don't fluctuate with business performance.
Variable costs , conversely, change in direct proportion to production or business activity. Think of costs associated with materials for manufacturing or commission for sales .
For a startup, delineating between fixed and variable costs aids in crafting a more dynamic budget, allowing for adaptability as the business scales and evolves.
Startups often grapple with numerous upfront costs. From purchasing equipment and setting up a workspace to initial marketing campaigns, these one-time expenditures lay the foundation for business operations.
They differ from ongoing expenses like utility bills, raw materials, or employee wages that recur monthly or annually.
For a small business owner, distinguishing between these costs is critical. One-time expenditures often demand a larger chunk of initial capital, while ongoing expenses shape the monthly and annual budget.
By categorizing them separately, businesses can strategize funding needs more effectively, ensuring they're equipped to meet both immediate and recurrent financial obligations.
Personal savings.
This is often the most straightforward way to fund a startup. Entrepreneurs tap into their personal savings accounts to jumpstart their business.
While this method has the benefit of not incurring debt or diluting company ownership, it intertwines the individual's personal financial security with the business's fate.
The entrepreneur must be prepared for potential losses, and there's the evident psychological strain of putting one's hard-earned money on the line.
Loans can be sourced from various institutions, from traditional banks to credit unions . They offer a substantial sum of money that can be paid back over time, usually with interest .
The main advantage of taking a loan is that the entrepreneur retains full ownership and control of the business.
However, there's the obligation of monthly repayments, which can strain a business's cash flow, especially in its early days. Additionally, securing a loan often requires collateral and a sound credit history.
Investors, including angel investors and venture capitalists , offer capital in exchange for equity or a stake in the company.
Angel investors are typically high-net-worth individuals who provide funding in the initial stages, while venture capitalists come in when there's proven business potential, often injecting larger sums. The advantage is substantial funding without the immediate pressure of repayments.
However, in exchange for their investment, they often seek a say in business decisions, which might mean compromising on some aspects of the original business vision.
Grants are essentially 'free money' often provided by government programs, non-profit organizations, or corporations to promote innovation and support businesses in specific sectors.
The primary advantage of grants is that they don't need to be repaid, nor do they dilute company ownership. However, they can be highly competitive and might come with stipulations on how the funds should be used.
Moreover, the application process can be lengthy and requires showcasing the business's potential or alignment with the specific goals or missions of the granting institution.
Income statement (profit & loss).
An Income Statement , often termed as the Profit & Loss statement , showcases a business's financial performance over a specific time frame. It details revenues , expenses, and ultimately, profits or losses.
By analyzing this statement, business owners can pinpoint revenue drivers, identify exorbitant costs, and understand the net result of their operations.
For small businesses, this document is instrumental in making informed decisions. For instance, if a certain product line is consistently unprofitable, it might be prudent to discontinue it. Conversely, if another segment is thriving, it might warrant further investment.
The Income Statement, thus, serves as a financial mirror, reflecting the outcomes of business strategies and decisions.
The Balance Sheet offers a snapshot of a company's assets , liabilities , and equity at a specific point in time.
Assets include everything the business owns, from physical items like equipment to intangible assets like patents .
Liabilities, on the other hand, encompass what the company owes, be it bank loans or unpaid bills.
Equity represents the owner's stake in the business, calculated as assets minus liabilities.
This statement is crucial for small businesses as it offers insights into their financial health. A robust asset base, minimal liabilities, and growing equity signify a thriving enterprise.
In contrast, mounting liabilities or dwindling assets could be red flags, signaling the need for intervention and strategy recalibration.
While the Income Statement reveals profitability, the Cash Flow Statement tracks the actual movement of money.
It categorizes cash flows into operating (day-to-day business), investing (buying/selling assets), and financing (loans or equity transactions) activities. This statement unveils the liquidity of a business, indicating whether it has sufficient cash to meet immediate obligations.
For small businesses, maintaining positive cash flow is often more vital than showcasing profitability.
After all, a business might be profitable on paper yet struggle if clients delay payments or unforeseen expenses emerge.
By regularly reviewing the Cash Flow Statement, small business owners can anticipate cash crunches and strategize accordingly, ensuring seamless operations irrespective of revenue cycles.
Importance of budgeting for a small business.
Budgeting is the financial blueprint for any business, detailing anticipated revenues and expenses for a forthcoming period. It's a proactive approach, enabling businesses to allocate resources efficiently, plan for investments, and prepare for potential financial challenges.
For small businesses, a meticulous budget is often the linchpin of stability, ensuring they operate within their means and avoid financial pitfalls.
Having a well-defined budget also fosters discipline. It curtails frivolous spending, emphasizes cost-efficiency, and sets clear financial boundaries.
For small businesses, where every dollar counts, a stringent budget is the gateway to financial prudence, ensuring that funds are utilized judiciously, fostering growth, and minimizing wastage.
Bulk purchasing.
When businesses buy supplies in large quantities, they often benefit from discounts due to economies of scale . This can significantly reduce per-unit costs.
However, while bulk purchasing leads to immediate savings, businesses must ensure they have adequate storage and that the products won't expire or become obsolete before they're used.
Regularly reviewing and renegotiating contracts with suppliers or service providers can lead to better terms and lower costs. This might involve exploring volume discounts, longer payment terms, or even bartering services.
Building strong relationships with vendors often paves the way for such negotiations.
Simple changes, like switching to LED lighting or investing in energy-efficient appliances, can lead to long-term savings in utility bills. Moreover, energy conservation not only reduces costs but also minimizes the environmental footprint, which can enhance the business's reputation.
Modern software and technology can streamline business processes. Automation tools can handle repetitive tasks, reducing labor costs.
Meanwhile, data analytics tools can provide insights into customer preferences and behavior, ensuring that marketing budgets are used effectively and target the right audience.
Regularly reviewing and refining business processes can eliminate redundancies and improve efficiency. This might mean merging roles, cutting down on unnecessary meetings, or simplifying supply chains. A leaner operation often translates to reduced expenses.
Instead of maintaining an in-house team for every function, businesses can outsource tasks that aren't central to their operations.
For instance, functions like accounting , IT support, or digital marketing can be outsourced to specialized agencies, often leading to cost savings and access to expert skills.
Encouraging employees to adopt a cost-conscious mindset can lead to collective savings. This can be fostered through incentives, regular training, or even simple practices like recycling and reusing office supplies.
When everyone in the organization is attuned to the importance of cost savings, the cumulative effect can be substantial.
Techniques for predicting future sales in a small business, past sales data analysis.
Historical sales data is a foundational element in any forecasting effort. By reviewing previous sales figures, businesses can identify patterns, understand seasonal fluctuations, and recognize the effects of past initiatives.
This information offers a baseline upon which to build future projections, accounting for known recurring variables in the business cycle .
Understanding the larger market dynamics is crucial for accurate forecasting. This involves tracking industry trends, monitoring shifts in consumer behavior, and being aware of potential market disruptions.
For instance, a sudden technological advancement can change consumer preferences or regulatory changes might impact an industry.
For small businesses, localized insights can be especially impactful. Observing local competitors, understanding regional consumer preferences, or noting shifts in the local economy can offer precise data points.
These granular details, when integrated into a larger forecasting model, can enhance prediction accuracy.
Direct feedback from customers is an invaluable source of insights. Surveys, focus groups, or even informal chats can reveal customer sentiments, preferences, and potential future purchasing behavior.
For instance, if a majority of loyal customers express interest in a new product or service, it can be indicative of future sales potential.
This technique involves analyzing a series of data points (like monthly sales) by creating averages from different subsets of the full data set.
For yearly forecasting, a 12-month moving average can be used to smooth out short-term fluctuations and highlight longer-term trends or cycles.
Regression analysis is a statistical tool used to identify relationships between variables. In sales forecasting, it can help understand how different factors (like marketing spend, seasonal variations, or competitor actions) relate to sales figures.
Once these relationships are understood, businesses can predict future sales based on planned actions or expected external events.
The cash cycle encompasses the time it takes for a business to convert resource investments, often in the form of inventory, back into cash.
This involves the processes of purchasing inventory, selling it, and subsequently collecting payment. A shorter cycle implies quicker cash turnarounds, which are vital for liquidity.
For small businesses, a firm grasp of the cash cycle can aid in managing cash flow more effectively.
By identifying bottlenecks or delays, businesses can strategize to expedite processes. This might involve renegotiating payment terms with suppliers, offering discounts for prompt customer payments, or optimizing inventory levels to prevent overstocking.
Ultimately, understanding and optimizing the cash cycle ensures that a business remains liquid and agile.
Seasonality affects many businesses, from the ice cream vendor witnessing summer surges to the retailer bracing for holiday shopping frenzies.
By analyzing historical data and market trends, businesses can prepare for these cyclical shifts, ensuring they stock up, staff appropriately, and market effectively.
Small businesses, often operating on tighter margins , need to be especially vigilant. Beyond seasonality, they must also brace for unexpected changes – a local construction project obstructing store access, a sudden competitor emergence, or unforeseen regulatory changes.
Building a financial buffer, diversifying product or service lines, and maintaining flexible operational strategies can equip small businesses to weather these unforeseen challenges with resilience.
Role of debt and equity financing.
When businesses seek external funding, they often grapple with the debt vs. equity conundrum. Debt financing involves borrowing money, typically via loans. While it doesn't dilute ownership, it necessitates regular interest payments, potentially impacting cash flow.
Equity financing, on the other hand, entails selling a stake in the business to investors. It might not demand regular repayments, but it dilutes ownership and might influence business decisions.
Small businesses must weigh these options carefully. While loans offer a structured repayment plan and retained control, they might strain finances if the business hits a rough patch.
Equity financing, although relinquishing some control, might bring aboard strategic partners, offering expertise and networks in addition to funds.
The optimal choice hinges on the business's financial health, growth aspirations, and the founder's comfort with sharing control.
A staple in the lending arena, term loans offer businesses a fixed amount of capital that is paid back over a specified period with interest. They're often used for significant one-time expenses, such as purchasing machinery, real estate , or even business expansion.
With predictable monthly payments, businesses can plan their budgets accordingly. However, they might require collateral and a robust credit history for approval.
Unlike term loans that provide funds in a lump sum, a line of credit grants businesses access to a pool of funds up to a certain limit.
Businesses can draw from this line as needed, only paying interest on the amount they use. This makes it a versatile tool, especially for managing cash flow fluctuations or unexpected expenses. It serves as a financial safety net, ready for use whenever required.
As the name suggests, microloans are smaller loans designed to cater to businesses that might not need substantial amounts of capital. They're particularly beneficial for startups, businesses with limited credit histories, or those in need of a quick, small financial boost.
Since they are of a smaller denomination, the approval process might be more lenient than traditional loans.
A contemporary twist to the traditional lending model, peer-to-peer (P2P) platforms connect borrowers directly with individual lenders or investor groups.
This direct model often translates to quicker approvals and competitive interest rates as the overheads of traditional banking structures are removed. With technology at its core, P2P lending can offer a more user-friendly, streamlined process.
However, creditworthiness still plays a pivotal role in determining interest rates and loan amounts.
In an increasingly digital age, crowdfunding platforms like Kickstarter or Indiegogo have emerged as viable financing avenues.
These platforms enable businesses to raise small amounts from a large number of people, often in exchange for product discounts, early access, or other perks. This not only secures funds but also validates the business idea and fosters a community of supporters.
Other alternatives include invoice financing, where businesses get an advance on pending invoices, or merchant cash advances tailored for businesses with significant credit card sales.
Each financing mode offers unique advantages and constraints. Small businesses must meticulously evaluate their financial landscape, growth trajectories, and risk appetite to harness the most suitable option.
Basic tax obligations for small businesses.
Navigating the maze of taxation can be daunting, especially for small businesses. Yet, understanding and fulfilling tax obligations is crucial.
Depending on the business structure—whether sole proprietorship , partnership , LLC , or corporation—different tax rules apply. For instance, while corporations are taxed on their earnings, sole proprietors report business income and expenses on their personal tax returns.
In addition to income taxes, small businesses may also be responsible for employment taxes if they have employees. This covers Social Security , Medicare , federal unemployment, and sometimes state-specific taxes.
There might also be sales taxes, property taxes, or special state-specific levies to consider.
Consistently maintaining accurate financial records, being aware of filing deadlines, and setting aside funds for tax obligations are essential practices to avoid penalties and ensure compliance.
Tax planning is the strategic approach to minimizing tax liability through the best use of available allowances, deductions, exclusions, and breaks.
For small businesses, effective tax planning can lead to significant savings.
This might involve strategies like deferring income to a later tax year, choosing the optimal time to purchase equipment, or taking advantage of specific credits available to businesses in certain sectors or regions.
Several potential deductions can reduce taxable income for small businesses. These include expenses like rent, utilities, business travel, employee wages, and even certain meals.
By keeping abreast of tax law changes and actively seeking out eligible deductions, small businesses can optimize their financial landscape, ensuring they're not paying more in taxes than necessary.
While it's feasible for small business owners to manage their taxes, the intricate nuances of tax laws make it beneficial to consult professionals.
An experienced accountant or tax consultant can not only ensure compliance but can proactively recommend strategies to reduce tax liability.
They can guide businesses on issues like whether to classify someone as an employee or a contractor, how to structure the business for optimal taxation, or when to make certain capital investments.
Beyond just annual tax filing, these professionals offer year-round counsel, helping businesses maintain clean financial records, stay updated on tax law changes, and plan for future financial moves.
The investment in professional advice often pays dividends , saving businesses from costly mistakes, penalties, or missed financial opportunities.
Setting checkpoints and milestones.
Like any strategic blueprint, a financial plan isn't static. It serves as a guiding framework but should be flexible enough to adapt to evolving business realities.
Setting regular checkpoints— quarterly , half-yearly, or annually—can help businesses assess whether they're on track to meet their financial objectives.
Milestones, such as reaching a specific sales target, launching a new product, or expanding into a new market, offer tangible markers of progress. Celebrating these victories can bolster morale, while any shortfalls can serve as lessons, prompting strategy tweaks. F
or small businesses, where agility is an asset, regularly revisiting the financial plan ensures that the business remains aligned with its overarching financial goals while being responsive to the dynamic marketplace.
Financial ratios offer a distilled snapshot of a business's health. Ratios like the current ratio ( current assets divided by current liabilities ) can shed light on liquidity, indicating whether a business can meet short-term obligations.
The debt-to-equity ratio , contrasting borrowed funds with owner's equity, offers insights into the business's leverage and potential financial risk.
Profit margin , depicting profitability relative to sales, can highlight operational efficiency. By consistently monitoring these and other pertinent ratios, small businesses can glean actionable insights, understanding their financial strengths and areas needing attention.
In a realm where early intervention can stave off major financial setbacks, these ratios serve as vital diagnostic tools, guiding informed decision-making.
In the ever-evolving world of business, flexibility is paramount. If financial reviews indicate that certain strategies aren't yielding anticipated results, it might be time to pivot.
This could involve tweaking product offerings, revising pricing strategies, targeting a different customer segment, or even overhauling the business model.
For small businesses, the ability to pivot can be a lifeline. It allows them to respond swiftly to market changes, customer feedback, or internal challenges.
A robust financial plan, while offering direction, should also be pliable, accommodating shifts in strategy based on real-world performance. After all, in the business arena, adaptability often spells the difference between stagnation and growth.
Financial foresight is integral for the stability and growth of small businesses. Effective revenue and cash flow forecasting, anchored by historical sales data and enhanced by market research, local trends, and customer feedback, ensures businesses are prepared for future demands.
With the unpredictability of the business environment, understanding the cash cycle and preparing for unforeseen challenges is essential.
As businesses contemplate external financing, the decision between debt and equity and the myriad of loan types, should be made judiciously, keeping in mind the business's health, growth aspirations, and risk appetite.
Furthermore, diligent tax planning, with professional guidance, can lead to significant financial benefits. Regular reviews using financial ratios allow businesses to gauge their performance, adapt strategies, and pivot when necessary.
Ultimately, the agility to adapt, guided by a well-structured financial plan, is pivotal for businesses to thrive in a dynamic marketplace.
What is the importance of a financial plan for small businesses.
A financial plan offers a structured roadmap, guiding businesses in making informed decisions, ensuring growth, and navigating financial challenges.
Forecasting provides insights into expected income, aiding in budget allocation, while understanding cash cycles ensures effective liquidity management.
Core components include setting objectives, estimating startup costs, preparing financial statements, budgeting, forecasting, securing financing, and tax management.
Tax planning ensures compliance, optimizes tax liabilities through available deductions, and helps businesses save money and avoid penalties.
Regular reviews, ideally quarterly or half-yearly, ensure alignment with business goals and allow for strategy adjustments based on real-world performance.
About the Author
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .
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The (step by step) guide of what to include in your financial business plan.
No need to be a financial guru or an accountant to include a financial plan.
Ready to start?
In this article, we’ll provide you with a complete breakdown of what needs to be included in your financial section.
The good news is:
You don’t have to be a financial Guru or an accountant to include a Financial Plan!
By following our steps, you will be able to understand the financial section of your plan, present it with confidence…
And keep a close eye on your bottom line!
This article is part of the Business Planning Hub , where you’ll find lots of guides and resources to help you create the perfect business plan!
Table of Contents
I know that the financial plan can feel like the most intimidating part of putting a business plan together.
Like many other business owners, you may not have a degree in accounting or have gone to business school.
Well, this article will teach you all there is to know about the financial element of your business plan, as well as showing you what you need to include!
Ready? Let’s go.
To start with, if you are looking for funding, you need to include the following information :
When putting together a funding requirement, you must include what amount is necessary at the present time and what amount will be required in the future . Outline the terms that would be favorable, along with the type of funding (e.g., debt, equity) and the time period that it will apply to.
Historical and prospective financial information will also be required, which moves on to the next part of the plan which is financial projections.
Before tackling the financial projections, the required market needs to be analyzed thoroughly. This enables the objectives to be set out clearly and in an organized fashion.
Resources can then be allocated efficiently, which demonstrates a good thought process.
When putting together a business plan package there are essential financial statements which must be included; these are as follows:
For those who own an established business, it will be necessary to provide an outline of the company’s historical performance . How long the company has been in business for will impact what amount of data is required. Usually, creditors will ask for three to five years.
Included in the financial data will be balance sheets , the company’s income statements , along with cash flow statements for each year that the company has been trading (usually three to five years will suffice).
Another factor that will be of interest to a creditor will be any collateral within the business that can be used to secure the loan, irrespective of the stage that the business is at.
Whether a business is in the start-up phase or is continually growing, it will be necessary to provide the future forecasted financial data . Generally, a creditor will want to see what direction the company will be moving in within the next five years.
All five years’ projections should include balance sheets , cash flow statements , capital expenditure budgets , and forecasted income statements .
The first year’s projections will be more detailed , and forecasts should be on a monthly or quarterly basis. For years two through to five projections can be quarterly or yearly.
It is important that the projected forecasts match the funding required . Potential creditors will be looking out for any inconsistencies.
Any assumptions that have been made within the projections should be justified and summarised so that a potential creditor will not be left with any niggling doubts.
The final section of the financial projections should include a brief summary of all the overall financial information given. This can be illustrated with graphs which could include ratio and trend analysis’.
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This is also referred to as a ‘ statement of cash flows ’ and gives you an indication of the amount of cash that has come in, how much cash has been paid out, and what cash is left at the end (typically per month).
A word of warning…
This sounds like your sales, your expenses, and your profits…
Say, you were to invoice a client and they didn’t pay by the date it was due. What happens if you’re late paying your own bills?
These aren’t shown in your Income Statement , but will be shown in the cash flow statement .
This statement is just as important as any other statement. Your business needs cash to survive!
You will have a tough time if you are not sure how much cash is in the bank, where the cash is coming from, or going to, and when!
Your cash flow statement lays all of this out. A business plan is not complete without one. And, unless you can lay out this information for your investors to see, they won’t be lending you anything!
Having a thorough understanding of just how much cash your business has, where it comes from, and where it’s going ensures you’ll have a healthy business. Your cash flow statement outlines the difference with what your income statement shows as income (this is your profit) and the actual CASH position of the business.
A business can still be profitable but not have sufficient cash in the bank to pay any expenses.
It is also possible for a business NOT to be profitable, and yet still have cash in the bank for many months, which then gives you a bit more time for you to turn the business around.
This is why it is critical that you understand your financial statement.
In accounting, there are two methods .
Cash Method of Accounting:
This is where you account just your sales and expenses when they happen. You don’t necessarily worry about matching your expenses to a sale (or vice-versa).
Accrual Method of Accounting:
This is where you account for both your sales and expenses in tandem. For example, you get a large pre-order for one of your products. You would hold off accounting for all of the pre-order sales revenue until you had started to manufacture and deliver the product.
When you match revenue with its related expenses, it’s known as the ‘matching principle’ . This is what accrual accounting is all about.
Using the cash method means that your cash flow and your profit and loss statement will be very similar.
Yet, the accrual method gives a much better idea of how exactly your business is operating . It would also be a good idea to switch to this method if you haven’t already.
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So, you want to know why….
OK, well let’s pretend you run an outdoor activity center . You could receive a payment from a customer in April, but they aren’t coming to visit until July. If you were to use the accrual method, this wouldn’t be recognized until you’ve actually performed the service. This means that the revenue and the expense would not show up until July.
For a more accurate way to determine how your business is working, the accrual accounting method is definitely the best way to go!
Click on the download button to get your FREE Cash Flow template.
Your Sales Forecast deals with your projections of how much you think you will sell over a specific time (1 to 3 years, for example).
This element of your business plan is crucial , especially if you have investors involved. It needs to be a constant part of your business planning processes.
You need to create your sales forecast so it’s consistent with the sales number which is used in your Profit & Loss Statement.
Unfortunately, with sales forecasts , the formula of one size fitting all, doesn’t apply. All businesses have different needs, so how you choose to organize and segment your forecast will depend upon your type of business and just how thorough you want to be in tracking your sales.
It’s your choice as to how detailed your sales forecast is . You can simply summarize, if you want. But it’s important to have something in your business plan.
It’s useful for both planning and marketing if you break your sales forecasts into sections .
For example, for a restaurant owner, this could mean separating out your forecasts for both your lunch and dinner sales. For a health club, it could be useful to differentiate forecasts into single, joint or family memberships, sales from the club shop, restaurant etc. Or you could simply forecast every product individually.
Below is an example of the Sales forecast over one-year and five year period for an Ecommerce Store :
An Income Statement of your profit & loss statement explains simply just how your company has made a profit (and in some circumstances, has made a loss).
It really is that simple…
In the table, it lists all of the revenue streams as well as your expenses. At the bottom, it calculates the total net profits or losses.
It’s a vital report and one you should be able to understand.
These components are the pillar of your business model – how you’ll make your money .
You also need to include a list of the operating expenses for your business . These are the costs of running your company (i.e., costs which aren’t incurred from making a sale). Examples are rent, insurance, etc.
To get your Operating Income, you simply minus your operating expenses from your gross margin:
Gross Margin – Operating Expenses = Operating Income
Your operating income is typically equivalent to your “earnings before interest, taxes, depreciation, and amortization” (EBITDA). This is how much profit you have made before any tax or accounting obligations.
Your “bottom line” – which is your net income, is found right at the bottom of your income statement. This is your EBITDA minus the “ITDA”.
Operating Income – Interest, Taxes, Depreciation, and Amortization Expenses = Net Income.
Click on the download button to get your FREE Profit & Loss template.
Below is an example of a profit and loss statement for an Ecommerce store:
The concept of a balance sheet is relatively straightforward. It is used to determine if the business has more assets rather than liabilities and in order to be financially healthy they must balance out. It will also highlight the company’s net worth, and usually, this information is gathered on a quarterly basis.
Both liabilities and assets are organized by time on a balance sheet. So, with assets, for example, the quicker that the business can turn an asset into cash, the higher it will place on the balance sheet. However, with liabilities, the quicker something needs paying, the higher up the item is placed.
Assets = Liabilities + Equity
The total of your liabilities + total of your equity = Total of your assets.
Below you can see an example of an ecommerce store balance sheet:
Click on the download button to get your FREE Balance Sheet template.
This is especially important if you are looking to have a lot of labor costs, rather than a solo entrepreneur.
It’s important to understand how your staff will affect your business.
It’s a great idea to list out any entire departments or offices so you can see exactly which department is costing the most.
The below example Personnel Statement is from an Advertising Agency Business Plan :
I can’t stress enough how important this section is when it comes to producing your Business Plan.
You must understand it!
You can always hire a bookkeeper or an accounting firm to produce these figures for you, but you need to be able to understand them as they are key to the growth of your business.
If you’re also sitting in front of an investor and are able to answer questions about your numbers, your chances of securing any funding is going to be much higher.
Why not check out our other resources to help with your financial plan today!
Now I’d love to hear from you:
Are you still unsure of which business plan you need?
Maybe you have written a business plan and would like us to review it?
Leave any comments below and I will be sure to answer as soon as they come in!
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By Joe Weller | October 11, 2021
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A business plan is the cornerstone of any successful company, regardless of size or industry. This step-by-step guide provides information on writing a business plan for organizations at any stage, complete with free templates and expert advice.
Included on this page, you’ll find a step-by-step guide to writing a business plan and a chart to identify which type of business plan you should write . Plus, find information on how a business plan can help grow a business and expert tips on writing one .
A business plan is a document that communicates a company’s goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered.
A business plan can highlight varying time periods, depending on the stage of your company and its goals. That said, a typical business plan will include the following benchmarks:
Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.
While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors. In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.
For more information, visit our comprehensive guide to writing a strategic plan or download free strategic plan templates . This page focuses on for-profit business plans, but you can read our article with nonprofit business plan templates .
The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:
If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference. For an in-depth description of each step listed above, read “ How to Write a Business Plan Step by Step ” below.
Broadly speaking, your audience includes anyone with a vested interest in your organization. They can include potential and existing investors, as well as customers, internal team members, suppliers, and vendors.
Your business’s stage and intended audience dictates the level of detail your plan needs. Corporations require a thorough business plan — up to 100 pages. Small businesses or startups should have a concise plan focusing on financials and strategy.
In order to identify which type of business plan you need to create, ask: “What do we want the plan to do?” Identify function first, and form will follow.
Use the chart below as a guide for what type of business plan to create:
Function | Audience | Type of Business Plan |
---|---|---|
Serve as a loose guide of objectives and timeline | Internal | Lean |
Serve as a detailed, brass-tacks blueprint of business goals and timeline | Internal | Traditional |
Serve as a strategic document with a narrative focus on organization-wide goals, priorities, and vision | Internal | Strategic |
Earn a company loan or grant | External | Traditional (with focus on financial documents) |
Attract investors or partners | External | Traditional/strategic (with focus on financials, as well as support departments, such as marketing, sales, product, etc.) |
To test a business or startup idea | Internal | Lean |
There is no set order for a business plan, with the exception of the executive summary, which should always come first. Beyond that, simply ensure that you organize the plan in a way that makes sense and flows naturally.
A traditional business plan follows the standard structure — because these plans encourage detail, they tend to require more work upfront and can run dozens of pages. A Lean business plan is less common and focuses on summarizing critical points for each section. These plans take much less work and typically run one page in length.
In general, you should use a traditional model for a legacy company, a large company, or any business that does not adhere to Lean (or another Agile method ). Use Lean if you expect the company to pivot quickly or if you already employ a Lean strategy with other business operations. Additionally, a Lean business plan can suffice if the document is for internal use only. Stick to a traditional version for investors, as they may be more sensitive to sudden changes or a high degree of built-in flexibility in the plan.
Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.
The executive summary will always be the first section of your business plan. The goal is to answer the following questions:
See our roundup of executive summary examples and templates for samples. Read our executive summary guide to learn more about writing one.
The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:
In this section, provide evidence that you have surveyed and understand the current marketplace, and that your product or service satisfies a niche in the market. To do so, answer these questions:
In many cases, a business plan proposes not a brand-new (or even market-disrupting) venture, but a more competitive version — whether via features, pricing, integrations, etc. — than what is currently available. In this section, answer the following questions to show that your product or service stands to outpace competitors:
In this section, write an overview of the team members and other key personnel who are integral to success. List roles and responsibilities, and if possible, note the hierarchy or team structure.
In this section, clearly define your product or service, as well as all the effort and resources that go into producing it. The strength of your product largely defines the success of your business, so it’s imperative that you take time to test and refine the product before launching into marketing, sales, or funding details.
Questions to answer in this section are as follows:
In this section, define the marketing strategy for your product or service. This doesn’t need to be as fleshed out as a full marketing plan , but it should answer basic questions, such as the following:
Write an overview of the sales strategy, including the priorities of each cycle, steps to achieve these goals, and metrics for success. For the purposes of a business plan, this section does not need to be a comprehensive, in-depth sales plan , but can simply outline the high-level objectives and strategies of your sales efforts.
Start by answering the following questions:
This section is one of the most critical parts of your business plan, particularly if you are sharing it with investors. You do not need to provide a full financial plan, but you should be able to answer the following questions:
Apart from the fundraising analysis, investors like to see thought-out financial projections for the future. As discussed earlier, depending on the scope and stage of your business, this could be anywhere from one to five years.
While these projections won’t be exact — and will need to be somewhat flexible — you should be able to gauge the following:
Download Business Plan Template
Microsoft Excel | Smartsheet
This basic business plan template has space for all the traditional elements: an executive summary, product or service details, target audience, marketing and sales strategies, etc. In the finances sections, input your baseline numbers, and the template will automatically calculate projections for sales forecasting, financial statements, and more.
For templates tailored to more specific needs, visit this business plan template roundup or download a fill-in-the-blank business plan template to make things easy.
If you are looking for a particular template by file type, visit our pages dedicated exclusively to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates.
A simple business plan is a streamlined, lightweight version of the large, traditional model. As opposed to a one-page business plan , which communicates high-level information for quick overviews (such as a stakeholder presentation), a simple business plan can exceed one page.
Below are the steps for creating a generic simple business plan, which are reflected in the template below .
Download Simple Business Plan Template
Microsoft Excel | Microsoft Word | Adobe PDF | Smartsheet
Use this simple business plan template to outline each aspect of your organization, including information about financing and opportunities to seek out further funding. This template is completely customizable to fit the needs of any business, whether it’s a startup or large company.
Read our article offering free simple business plan templates or free 30-60-90-day business plan templates to find more tailored options. You can also explore our collection of one page business templates .
A Lean startup business plan is a more Agile approach to a traditional version. The plan focuses more on activities, processes, and relationships (and maintains flexibility in all aspects), rather than on concrete deliverables and timelines.
While there is some overlap between a traditional and a Lean business plan, you can write a Lean plan by following the steps below:
Download Lean Business Plan Template for Startups
Microsoft Word | Adobe PDF
Startup leaders can use this Lean business plan template to relay the most critical information from a traditional plan. You’ll find all the sections listed above, including spaces for industry and product overviews, cost structure and sources of revenue, and key metrics, and a timeline. The template is completely customizable, so you can edit it to suit the objectives of your Lean startups.
See our wide variety of startup business plan templates for more options.
A business plan for a loan, often called a loan proposal , includes many of the same aspects of a traditional business plan, as well as additional financial documents, such as a credit history, a loan request, and a loan repayment plan.
In addition, you may be asked to include personal and business financial statements, a form of collateral, and equity investment information.
Download free financial templates to support your business plan.
Outside of including all the key details in your business plan, you have several options to elevate the document for the highest chance of winning funding and other resources. Follow these tips from experts:.
Outside of these more practical tips, the language you use is also important and may make or break your business plan.
Shaun Heng, VP of Operations at Coin Market Cap , gives the following advice on the writing, “Your business plan is your sales pitch to an investor. And as with any sales pitch, you need to strike the right tone and hit a few emotional chords. This is a little tricky in a business plan, because you also need to be formal and matter-of-fact. But you can still impress by weaving in descriptive language and saying things in a more elegant way.
“A great way to do this is by expanding your vocabulary, avoiding word repetition, and using business language. Instead of saying that something ‘will bring in as many customers as possible,’ try saying ‘will garner the largest possible market segment.’ Elevate your writing with precise descriptive words and you'll impress even the busiest investor.”
Additionally, Dean recommends that you “stay consistent and concise by keeping your tone and style steady throughout, and your language clear and precise. Include only what is 100 percent necessary.”
While a template provides a great outline of what to include in a business plan, a live document or more robust program can provide additional functionality, visibility, and real-time updates. The U.S. Small Business Association also curates resources for writing a business plan.
Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.
A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships.
Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.
Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change.
The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed.
When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time. Try Smartsheet for free, today.
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Blog Business What is A Business Plan & How To Design It?
Written by: Midori Nediger Jul 11, 2023
A business plan outlines the goals of your business and how it plans to achieve them.
Real important – because without it, it’s like running a business in the dark. It’s like a roadmap that guides your company’s direction and helps everyone stay on track.
Gone are the days when designing a business plan from scratch was a time-consuming and challenging task. Today, business plan templates offer a convenient solution by providing pre-designed layouts that simplify the process.
In this blog, I’m going to break it down for you. I’ll share the six things you need to know to put together a compelling, engaging business plan. Ready to get started now? Venngage’s online Business Plan Maker lets anyone create a winning business plan quickly and easily.
Click to jump ahead:
Simple business plan templates.
How to format your business plan.
To format your business plan:
A typical business plan is an in-depth document and covers every facet of your business (present and future). Creating a traditional business plan makes sense when you have a clear growth plan for the next three to five years, are in need of major funding, or want to attract long-term partners.
A professional business plan typically has the following sections:
A business plan can span a dozen or more pages because it presents the big picture, as complete as possible, to reassure others to invest in you. Investment can mean a few different things – usually financial, but also as partners or employees.
The sections that can take a lot of research and add to the bulk of your business plan are your market analysis, marketing and sales plans, and financial projections.
These are the sections that demonstrate your business acumen, your long-term vision, and your accountability. Whereas, sections like the executive summary are meant to grab attention, inspire and get people excited about your business.
To get started on your business plan, save yourself some time and use a template.
Most business plan templates will include things like a cover page, table of contents and the main sections you need. It will also have pre-formatted pages with placeholder text and charts that you can swap out.
It takes time to do market research, present growth plans, put together financial projections, analyze your customer base, create competitor breakdowns…the list goes on.
The last thing you want to do is spend precious time formatting the resulting document.
Save time by building your business plan from an existing business plan template, and customize it with your own content.
With a clean, consistent structure and clear headings, this template is the perfect starting point:
Then you’re free to customize the template with helpful visual elements like charts, tables, and diagrams, that will make your business pitch impossible to resist.
A Venngage business plan template is designed to help you communicate visually and explain complex ideas easily. The right business plan template for you depends on the length and detail of your business plan, your brand and style, and the different sections you want to cover.
If your small business doesn’t have a dedicated design team, but you still need to learn how to write a business plan to present to investors–build off of a pre-designed business plan template:
There are just a handful of our business plan templates that can be customized in the Venngage editor. Browse more business plan templates, choose one that’s best for you and start editing right away.
Structuring your startup business plan involves organizing it into sections such as executive summary, company description, market analysis, product/service offering, marketing and sales strategy, financial projections, and operational plan.
Here are some business plan template examples:
Short Business Plan Template
Number your pages and include a table of contents
A table of contents is crucial to help readers navigate your document and quickly find specific sections that are of interest to them.
It’s a good idea to include page numbers, main section headings, and section subheadings here for easy reference.
Keeping these tips in mind will ensure that your business plan design feels clean and professional and doesn’t distract from your content. You want your information, not your formatting, to be the focus!
Here are three tips for writing your business plan to ensure it’s easy to read, appears professional and is memorable.
Business plans need to be understandable at a glance to attract funding . Investors are looking for information that will help them understand your business quickly and without much effort.
Take a look at this snippet of the business plan template from above:
What stands out to you?
To me, the large green headers pop out first, making it easy to scan through the sections to find what I want to focus on.
This is because there’s a defined type hierarchy, giving more visual weight to the headers over the body text.
Next, the unique selling points of this business–superior quality products, unique glass carving and brass inlays, and excellent service–jump out. Because they’re presented in an indented list , they’re easier to see at a glance, which will likely make them more memorable.
Finally, I’m drawn to the bolded stats–“top 30% of the industry” and “4 out of 5 households spent money on renovation”.
Key statistics like these can go a long way towards convincing your investors that you’re worth their time and money. If you’re going to include them within larger paragraphs, make sure they stand out by increasing their font weight.
To sum up: make your report skimmable. Draw attention to important takeaways with indented lists, bolded text, and a clear type hierarchy.
If your business plan contains only text, stick with a single-column layout that reinforces the linear flow of the document. If your business plan includes some supporting data in the form of charts and tables, use a two-column layout to juxtapose text with its corresponding data.
When we read long passages of text, the ease at which we read depends on how the text flows on the page. Something called line length (the number of characters in a horizontal line of text) plays a huge role in readability, and is something you should consider when formatting your business plan.
To dictate line length, designers and typesetters play with the width of page margins (the edges of a document that don’t contain any text or images) with the aim of maximizing readability.
It’s generally accepted that the ideal line length sits somewhere between 40 and 90 characters per line. Any longer or shorter and you’ll find that something feels “off” about your document.
How do you achieve this in your business plan?
If you use a single-column layout, use nice wide margins (1 ½ to 2 inches) to limit your text to less than 90 characters per line.
With a two-column layout, you might need to use narrower margins (possibly as little as ½ an inch on either side) to make sure there’s enough space for at least 40 characters per line of text.
The last thing to remember about margins and line length–don’t play around with them from page to page. Use consistent margins across your whole document.
An executive summary is a snapshot of your business plan. It should be concise and hook your readers. It should reassure stakeholders that your business plan will be a worthwhile read.
How you choose to structure your executive summary is key. You can deliver a lot of excellent information that simply gets lost in a sea of text and paragraphs. Even if someone reads through it entirely, they may have missed something.
To make key information stand out, use vibrant headings, incorporate visuals throughout, and break up the layout of your text.
Not every investor looks for the same thing. Some will care more about who you or your executive team are, while another is interested solely in the financials of the business. Identifying each section makes it easy for readers to find exactly what they’re looking for.
You can also list out the key takeaways, briefly explaining them in the executive summary. If your reader finds everything they needed to know in the executive summary, they’ll happily move onto the rest of the business plan.
Color should be used with restraint in professional documents like business plans. Instead of adding color solely for aesthetic purposes, think of color selection as another tool to highlight information you want your reader to focus on and to tie the document together.
You shouldn’t need more than a single color (ideally one of your brand colors ) to achieve this in a business plan.
In business plan charts, color should be used only to clarify trends and relationships. Use color to emphasize single important data points, differentiate between real and projected values, or group related data:
In the rest of your business plan, keep color to a minimum. At most, use it to make headers stand out or to highlight key points in long-form text, diagrams, or tables.
The nice thing about keeping document colors this simple? It’s hard to mess up, and without any complex design work, it creates a sense of cohesion and unity within a document.
Since your business plan should be backed by solid data, you might want to include some of that data as evidence, in the form of charts, tables or diagrams . Even simple visuals can communicate better than long paragraphs of text.
I’ll touch on some specific types of charts commonly used in business plans next, but first let’s review a few general chart design tactics.
Avoid generic headers whenever possible. Maximize your chart’s value and impact by providing takeaway messages right in the title.
In the same vein, add direct annotations to data points or trends that support your case.
Repeating key messages within a chart, in the title, annotations, and captions, may improve viewers understanding and recall of those messages .
A market potential analysis is a fundamental pillar of your business plan. Market size and market share are two major components of a market potential analysis.
These numbers are typically in the millions and billions (the bigger the better, really), but most people have trouble grasping the meaning of such big numbers . At a surface level we can understand that one billion is one thousand times larger than one million, but we often struggle to comprehend what that really means.
This is the perfect opportunity to add some visual aids to your business plan.
Use bubble charts to represent market size
Bubble charts are useful for showing general proportions among numbers. Check out this one from our redesigned version of AirBnb’s first pitch deck :
Without having to think about the absolute values of these very large numbers, we can quickly see how they relate to one another.
While bubble charts are good for making quick, general comparisons, they’re less useful when it comes to precise measurements. To help readers make slightly more accurate judgements of proportion:
Use pie or donut charts to represent market share and market composition
Pie and donut charts are the industry standard for showing market share and market composition, since they’re the most widely understood method for representing part-to-whole relationships.
The way Uber breaks down their market with a simple donut chart makes their biggest segment (a key takeaway) really stand out, while the subtler differences between the smaller segments are still evident.
When you present a market analysis, use pie charts, donut charts, or bubble charts to aid the reader understanding proportions and part-to-whole relationships.
Another part of analyzing market potential is about identifying and understanding target customers. This means segmenting customers by geography, interests, demographics…really anything that might affect purchasing behaviour.
Two standard metrics that most businesses include in a market segmentation summary are customer age and gender. These data are easily summarized in a histogram, with bars that represent age group distribution.
Bar charts can then be used to contrast the key behaviors and lifestyle choices of the top consumer segments.
Histograms and bar charts are standard features of a market segmentation summary. Use them together to identify and present information about top customer segments.
Stakeholders will want to see that you have a concrete plan in place to help you reach your revenue goals. When formulating your goals, use the SMART principle to provide your stakeholders with a very clear vision of how you intend to achieve them.
Use a Gantt chart (a sort of modified bar chart) to outline the major milestones and phases of your business strategy. Try to include a multi-year plan, broken down by quarter and by project or department.
You can create your own Gantt chart with Venngage.
No matter how impressive your product line or services, your business won’t just magically grow. You concrete marketing and sales plans in place, and effectively communicate strategies to your stakeholders.
Start by acknowledging your target market – who are you going after? This is what your marketing and sales efforts will revolve around after all.
Demonstrate an understanding of the competitor landscape. You will always have direct or indirect competition, and showing how your planning accounts for it is key. Then you can talk about actual plans and strategies you wish to implement.
A product may great on its own. But its value is determined when there is a clear and obvious market for it. You can point out shortcomings of your competition, but you also need to show that your target audience exists and how you’re serving them.
A persona guide provides a great deal of context to readers of your business plan. It’s the best way for them to understand who cares about your product or service, how it aligns with their lifestyle and needs, and why your marketing and sales tactics will work.
A persona guide needs to be detailed, and share an intimate understanding of your target audience. The more you can divulge, the more reassuring your research and overall business plan will be.
Even if you don’t have a substantial customer base, you can still create an ideal persona guide to show who you’re pursuing.
Every business plan should include an analysis of the competitive landscape–an assessment of the strengths and weaknesses of competitive businesses.
In terms of visuals, this competitive analysis is typically summarized in a SWOT analysis matrix .
You can also present the SWOT analysis as a table or a list. The layout is up to you, but you want to focus on strengths, weaknesses, opportunities and threats in relation to your competition.
While the SWOT analysis framework provides valuable insights, it’s not the entire reflection of your competitive landscape. For example, it doesn’t make it easy to see at a glance the qualities that differentiate your business from your competitors.
To highlight those offerings that set you apart from your competitors, a comparison matrix is more effective. Take a look at these two templates:
With a direct competitor comparison, it’s easy to present the key differentiators between the existing options for a product or service, and your business.
Alternatively, a “ Magic Quadrant ” can be useful when you’re focused on comparing across two main metrics ( key differentiators ):
Finally, in a competitive market, there are going to be a lot of players who compete directly or indirectly with you. A breakdown of them all may not be necessary. Instead, you can point visually to the space that you will address, that has been so far ignored up to now.
To do that, a prioritization chart can be used. By plotting competing businesses on a prioritization chart, you highlight experiences existing competitors focus on, and where your business falls.
To explain any long-term marketing or sales plan, you want visuals. It’s easier to break down strategies you’ll be deploying every month or each quarter, when you can actually show what you’re talking about.
Keep in mind, those reading your business plan may not be marketers or sales executives. Being able to lay out your approach in a way that’s organized, shows how much thought you’ve given to your growth strategies.
You can design a simple roadmap that points to what you’ll be doing throughout the year. The more detailed you can get, the better.
You can also present your product roadmap , with your marketing roadmap how the business will be growing overall.
You don’t need to use a traditional roadmap layout, either. Experiment with different formats as you may find one easier to work with than another. As long as the time period for different strategies is clear, your roadmap will be easy to understand.
Presenting financial data isn’t easy. You have to crunch a lot of numbers before you can share projections with confidence. You’ll also need to explain how you arrived at the numbers and prepare for your answers.
Understanding how to organize your information is key to walking potential investors and other stakeholders through your projections.
The financials section of your business plan will get a lot of attention from stakeholders. Simple bar charts and pie charts won’t suffice, as they can’t present financial data in very much detail.
If your business has already been operating for some time, stakeholders will expect a detailed report of revenues and expenses. Tables are usually the best choice for this kind of financial summary, as they provide an unbiased view of the numbers and allow stakeholders to look up specific values.
If you’re interested in highlighting a particular trend, however, you may want to include a line chart featuring a smaller snapshot of your financial data:
If you’re just starting your business and you don’t have any detailed revenue data, you can still provide useful information about your budget. Outline higher-level budget allocation with an organizational flow chart .
You can use different types of graphs to also show how your business has performed thus far.
You can share results over the course of a year with a line graph. This is effective to show an overall set of trends and growth rates.
You can also compare previous years to highlight how your business has grown.
Your audience should be able to draw conclusions from your data within seconds. If there is simply too much information, or it’s hard to find important information, they will lose interest.
Looking for a business plan software to help save time and reduce errors? Pick from one of these 7 best business plan software to get started.
A business plan is the one key document that every young business needs to present their vision to potential investors and other stakeholders.
The quality of a business plan can make or break a young business Here’s a quick recap of what we covered for you to keep in mind:
You can always reference this post as you work on your business plan. I’ve also included additional blog posts you can reference for specific areas of your business plan.
More Resources for business planning and growth:
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This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business. Download Startup Financial Projections Template.
Use the numbers that you put in your sales forecast, expense projections, and cash flow statement. "Sales, lest cost of sales, is gross margin," Berry says. "Gross margin, less expenses, interest ...
Learn the key components of a financial plan for your startup, such as income statement, cash flow statement, balance sheet, and break-even analysis. Get a free template and tips to create a financial section of your business plan.
Financial ratios and metrics. With your financial statements and forecasts in place, you have all the numbers needed to calculate insightful financial ratios. While including these metrics in your financial plan for a business plan is entirely optional, having them easily accessible can be valuable for tracking your performance and overall ...
Maintaining a Healthy Balance Sheet Over Time. Step 4: Forecasting Cash Flow. Why Cash Flow is Your Business's Weather Forecast. Step-by-Step Method for Creating a Cash Flow Forecast. My Great Cash Flow Mishap. Step 5: Bringing It All Together for Financial Analysis. How to Use Your Financials to Calculate Key Ratios.
Collect relevant historical financial data and market analysis. Forecast expenses. Forecast sales. Build financial projections. The following five steps can help you break down the process of developing financial projections for your company: 1. Identify the purpose and timeframe for your projections.
Balance Sheet. The balance sheet portion of the financial plan aims to give an idea of what the business will be worth, considering all its assets and liabilities, at a future date. To do this, it uses figures from the income statement and cash flow statement. The essence of a balance sheet is found in the equation: Liabilities + Equity = Assets.
A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing. A business plan should follow a standard format and contain all ...
Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. A good business plan is much more than just a document that you write once and forget about. It's also a guide that helps you outline and achieve your goals. After completing your plan, you can ...
How to Write a Business Plan Step 1. Create a Cover Page. The first thing investors will see is the cover page for your business plan. Make sure it looks professional. A great cover page shows that you think about first impressions. A good business plan should have the following elements on a cover page:
The financial section of your business plan determines whether or not your business idea is viable and will be the focus of any investors who may be attracted to your business idea. The financial section is composed of four financial statements: the income statement, the cash flow projection, the balance sheet, and the statement of shareholders ...
The financial section of the business plan can be developed by you or an accountant. At any rate, the structure of the financial section generally includes the following items; A. Introduction to the Financial Plan. B. Forecasted Financial Statements. C. Notes to the Forecasted Financial Statements.
3. Equity: Total assets minus total liabilities (Assets = liabilities + equity.) Analysis. It's good to offer readers an analysis of the three basic financial statements — how they fit ...
1. Create Your Executive Summary. The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans. Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.
A good business plan guides you through each stage of starting and managing your business. You'll use your business plan as a roadmap for how to structure, run, and grow your new business. It's a way to think through the key elements of your business. Business plans can help you get funding or bring on new business partners.
Describe Your Services or Products. The business plan should have a section that explains the services or products that you're offering. This is the part where you can also describe how they fit ...
9. Denim Business Plan Template. Create your Business Plan with this easy-to-edit template Edit and Download. Dress your business plan in the fabric of your trade with this denim business plan template. The classic denim texture and patterns capture the true essence of your brand and draw your audience's attention.
Sample 30-60-90-Day Business Plan for Startup in Excel. This 90-day business plan is designed for startup companies to develop a 90-day action plan. This template gives you room to outline the following: main goals and deliverables for each 30-day increment; key business activities; task ownership; and deadlines.
A financial projection is an estimate of future revenue, expenses and profits for a business. It helps decision-makers plan and strategize based on these predicted financial outcomes. The critical elements of a financial projection are the income statements, cash flow and balance sheet. Choose from Visme's financial projection and budget ...
Every financial plan comprises several core components that, together, provide a holistic view of a business's financial health and direction. These include setting clear objectives, estimating costs, preparing financial statements, and considering sources of financing. Each component plays a pivotal role in ensuring a thorough and actionable ...
Learn how to create a financial forecast for your business plan using online software, templates and examples. Find out what financial tables are needed and how to use them to show your profitability and cash flow.
Sales Forecast. #4 Income statement or Profit & Loss Statement. #5 The Balance Sheet. #6 How to put together your Personnel Plan. #7 Conclusion. Useful Links. I know that the financial plan can feel like the most intimidating part of putting a business plan together. Like many other business owners, you may not have a degree in accounting or ...
A business plan is a document that communicates a company's goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered. A business plan can highlight varying time periods, depending on the stage of your company and its goals.
Jul 11, 2023. A business plan outlines the goals of your business and how it plans to achieve them. Real important - because without it, it's like running a business in the dark. It's like a roadmap that guides your company's direction and helps everyone stay on track. Gone are the days when designing a business plan from scratch was a ...